Did Donald Trump Cheat on His Social Security and Medicare Taxes?

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Did Donald Trump Cheat on His Social Security and Medicare Taxes?

The first page of Donald Trump’s 1995 New York resident income tax return, published by the New York Times, reveals that he reported on his 1995 federal tax return that he had just $6,108 in salary for the year. On that small salary, just $378.70 would have been paid for Social Security and just $88.56 for Medicare, for a grand total of just $467.26.  (Photo: Azi Paybarah/flickr/cc)

In 1995 and other years, has billionaire Donald Trump paid less for Social Security and Medicare than minimum wage workers paid? If he did, he probably cheated. The only way to know for sure is to see his federal income tax returns. But there is indeed evidence already in the public domain that suggests that, on top of being a racist, a misogynist, and a xenophobe, Donald Trump is a tax cheat.

The first page of Donald Trump’s 1995 New York resident income tax return, published by the New York Times, reveals that he reported on his 1995 federal tax return that he had just $6,108 in salary for the year. On that small salary, just $378.70 would have been paid for Social Security and just $88.56 for Medicare, for a grand total of just $467.26.  

"Like most other crimes, [Trump's] fraudulent mischaracterization is not victimless."

That same year, workers, earning the 1995 federal minimum wage of $4.25 an hour, made $8,840 for full time work. On those wages, $676.26 was paid for Social Security and Medicare - $209 more than paid on the reported salary of the billionaire Republican presidential nominee. 

Donald Trump earned a salary of only $6,108 in 1995? Less than a minimum wage worker? Hard to believe. And, indeed, it is contradicted in a report filed in 1997 with the U.S. Securities and Exchange Commission, which shows that Trump received a salary in 1995 of $583,333 and “other compensation” of $4,830,000 for a total that year of $5,413,333. If all of that income should have been assessed for Social Security and Medicare, Trump should have paid a total of $164,575.46!

So which is it? Did Trump and his corporation pay $164,575.46 for Social Security and Medicare, just $467.26, or some amount in between? And what was he required to pay? There is no way to know without seeing his federal tax return.

How widespread is it? A GAO study reviewing 2003 and 2004 tax returns calculated that Subchapter S corporations mischaracterized earned income by a whopping $23.5 billion, resulting in underpayments to Social Security and Medicare of billions of dollars in just those two years.

Like most other crimes, this fraudulent mischaracterization is not victimless. When cheating is done with respect to domestic and other low-income workers, those individuals are denied the disability, survivor, retirement, health, and unemployment protection the law requires they have.   If Donald Trump, Newt Gingrich, and their wealthy compatriots are illegally avoiding paying what they are obligated under the law to pay for Social Security, Medicare, Unemployment Insurance, and Workers’ Compensation, they may be able to get by without the benefits, but they are cheating us. 

Social Security and Medicare work so efficiently and well because they are universal. Given the perilous and rising income and wealth inequality over the last few decades, I do not believe the wealthiest are paying their fair share. But, it appears that Trump and his plutocrat friends may not even be paying what they legally owe already.

Again, it is impossible to know if one of those plutocrat-cheats is Donald Trump without seeing his tax returns. But perhaps that is one of the reasons he is being audited. 

It is amazing he is being audited for any reason, given the efforts of those in Congress to protect him and his fellow elites. Thanks to budget cuts, the rate of individual tax returns being audited is lower than it has been in over a decade. 

But Congress’s protection of the wealthy is even worse. One of the truly outrageous requirements imposed on the Internal Revenue Service is to spend its limited resources disproportionately on those returns of the poorest workers in the nation, those who claim the Earned Income Tax Credit (“EITC”). Hounding the working poor with audits should stop.

Indeed, Social Security should be expanded for those working poor and for all Americans.  Those expansions can and should be paid for by making millionaires and billionaires pay their fair share. And while we are at it, let’s make sure that they pay every penny that the cheaters among them are failing to pay now. The perfect poster boys for this effort are John Edwards, Newt Gingrich, and, quite likely, Donald J. Trump.

Nancy Altman

Nancy J. Altman has a thirty-five year background in the areas of Social Security and private pensions. She is co-director of Social Security Works and co-chair of the Strengthen Social Security coalition and campaign. She is the author of The Battle for Social Security: From FDR’s Vision to Bush’s Gamble (John Wiley & Sons, 2005) and co-author (with Eric Kingson) of Social Security Works! Why Social Security Isn't Going Broke and How Expanding It will Help Us All (The New Press, 2015).

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