SAN ANTONIO — A San Antonio tax lawyer broke down why wealthy people such as President Donald Trump tend to pay less federal income taxes than the average American.
Trump reportedly paid $750 in federal income taxes in 2016 and 2017 and no income tax at all during 10 other years, according to a New York Times article.
“I think Warrant Buffet famously said that he pays less tax by percentage than his secretary because he owns stock,” said Trey Gerhardt, who specializes in tax law.
The Congressional Budget Office indicates the average middle-income American household paid $2,200 in federal income taxes in 2016.
Gerhardt said the changing value of assets generating passive income may contribute to less federal income taxes being owed.
“You have to have money to make money and so you have to buy assets and you have to be able to hold them. Real estate is an asset that you get deductions on for its depreciation, but we all know that assets in real life appreciates,” Gerhardt said.
The topic of tax records is set to be one of the six topics to be discussed during the first presidential debate on Tuesday. Gerhardt noted Trump’s low tax burden could largely be linked to the performance of his businesses.
“If his businesses have not done well, which I know in the past in Las Vegas and places like that, you get to take a deduction against your income and so the only way for businesses to be taxed is to be profitable,” he said.
The highest tax bracket in the U.S. is 37 percent, which impacts single-filers making over $500,000.