It’s possible to “pay federal tax” like Donald Trump says and not pay federal personal income taxes


Donald Trump has bragged about being smart for not paying federal income taxes, and acknowledged that he took advantage of write-offs that allowed him to avoid paying income taxes he would otherwise have owed. (“I love depreciation,” he gushed during the second presidential debate.)

Portions of his 1995 tax returns published by the New York Times indicated a $916 million loss that could potentially have allowed Trump to avoid paying personal federal income tax for close to 20 years. Since Trump has declined to release his returns, breaking with longstanding practice by candidates for the US presidency, it’s hard to know whether he has been paying personal income tax and how much.

But he has also at several turns contended “I pay federal tax,” as he did during Sunday night’s second presidential debate.

It is notable that Trump didn’t say in those instances that he paid “federal personal income tax.”

That’s because it is very possible to pay “federal tax” without paying “federal income tax.” The US government, for instance, levies a tax on gasoline of 18.4 cents per gallon and 24.4 cents per gallon for diesel that’s effectively paid by anyone who drives a vehicle. There are also federal taxes on jet fuel, like that used in Trump’s planes. And there are federal payroll taxes levied on employers and employees that are used to fund Medicare, Social Security, and unemployment programs—which he presumably would be subject to.

So Trump could truthfully say he pays federal taxes even if he didn’t pay federal income tax. Close to 50% of the federal government’s revenue comes from individual income taxes—so if Trump didn’t pay them, he wouldn’t be contributing to the biggest source of funds for US government spending. (Payroll taxes are 33% and corporate taxes 11% of federal revenue.)

Trump also said during the debate: “I pay hundreds of millions of dollars in taxes.”

Without his releasing his returns, it’s hard to know what precisely that means.

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