History of Presidents and Federal Income Tax: What’s Normal?

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History of Presidents and Federal Income Tax: What’s Normal?

Former President Donald Trump did not fit the model when it came to Oval Office occupants, from temperament to professional experience. He also violated presidential standards by refusing to reveal his federal tax returns to the public.

The New York Times obtained two decades’ worth of Trump’s files, revealing minuscule $750 tax obligations in 2016, the year he was elected, and in 2017, when he took office, owing to large company losses and contentious write-offs.

Given Trump’s hesitation to reveal this information, it’s ironic that the custom of sharing tax returns with the public began with another president who was embroiled in controversy over his substantial deductions: Richard Nixon.

Here’s a look at presidents and their Internal Revenue Service (IRS) files since the federal government began collecting income taxes in the early 1900s.

Key Takeaways

  • There is no legal need for a serving president to reveal their tax returns, although doing so is typically viewed as good to their image.
  • Every president from Nixon through Obama has published his entire tax returns to the public, with the exception of Gerald Ford, who gave a tax summary.
  • Because Donald Trump refused to provide his tax returns, it took The New York Times lengthy digging to discover what was in the president’s returns.
  • President Joe Biden has maintained the tradition of openness by disclosing his and his wife’s tax returns for the fiscal year 2020.

A Tradition of Transparency

While the United States has previously had different types of wage-based taxation, the modern income tax did not arise until the 16 Amendment was passed in 1913. For decades, executive branch executives kept their results close to the vest.

Nixon: The First President to Release Tax Returns

During the Nixon administration, a series of press leaks revealed that the president had made various improper deductions to decrease his tax bill.

According to media sources, Nixon paid just $792 in federal income tax in 1970 and $878 in 1971, while earning more than $200,000 in each of those years. To soothe public fears, Nixon later disclosed his tax returns for each year between 1969, when he took office, and 1972. The event prompted his iconic press pool remark: “People have got to know whether or not their president is a criminal.” “Well, I’m not a thief.”

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From Ford to Obama

When he campaigned for president in 1976, Nixon’s successor, Gerald Ford, did not reveal his entire tax returns, but he did publish a summary comprising a decade of personal tax information. According to Tax Analysts, the roundup contained Ford’s total income, taxable income, notable deductions, and taxes paid.

Starting with Jimmy Carter, every president up to and including Barack Obama voluntarily released their tax returns for each year they were in office. While there is no legal need for them to share such information with the public, doing so has been seen as a means to create confidence with the American people.

During that period, the amount of taxes paid varied greatly from president to president. On the low end, Bill Clinton paid $62,670 in federal income taxes during his first year as President in 1993. According to the Associated Press, the majority of his $293,757 income came from his yearly pay as president, but he also earned $40,000 in capital gains from assets in a blind trust that year.

Obama paid the most throughout that four-decade period, forking up $1,792,414 to the Treasury in 2009. The majority of his $5.5 million adjusted gross income that year came from book royalties, notably his 1995 memoir, Dreams From My Father. The federal income taxes paid by each of the previous seven presidents during their first year in office are listed here.

Federal Income Taxes Paid During First Year in Office
Ronald Reagan (1981)$165,202
George H.W. Bush (1989)$101,382
Bill Clinton (1993)$62,670
George W. Bush (2001)$250,202
Barack Obama (2009)$1,792,414
Donald Trump (2017)$750
Joe Biden (2021)$148,687

The Trump Tax Saga

The presidential practice of freely disclosing one’s tax history came to an end with Donald Trump’s presidential campaign in 2015 and 2016. Given his vast international business activities and depiction as a highly talented entrepreneur, opponents have claimed that the public’s demand for openness is especially vital with this president.

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Trump did not submitted any tax returns. The real estate magnate repeatedly said that such a release would be impossible due to an ongoing audit. Because IRS audits are private, it’s difficult to determine if such an inquiry is ongoing. Even if such were the case, there is no legal stumbling block to making returns public.

The tax collecting agency has a long-standing habit of scrutinizing the annual file of the current president. If audits prevent the production of 1040 forms, prior holders of the highest position in the United States have not been harmed.

Trump has also claimed that the yearly financial disclosure papers required of presidents offer a more accurate picture of their wealth. Many of his detractors believe that such forms, although disclosing a president’s assets, merely offer a very wide range in terms of the value of any holdings. And they don’t say anything about how much tax the president paid that year.

$792

The amount of federal income tax President Nixon allegedly paid in 1970, prompting him to release his tax records from 1969 through 1972.

The New York Times’ Revelations

Trump’s objection was arguably rendered irrelevant when The New York Times revealed that it had gotten more than two decades of his tax returns in an unexpected, late-election-cycle twist. Details from The New York Times’ reporting suggest why the president may have resisted for so long: years of allegedly paying little or no tax, tens of millions of dollars in debt, and a slew of contentious tax deductions, including $747,622 in “consulting fees” paid to his daughter Ivanka and more than $70,000 in hairstyling expenses while hosting “The Apprentice” on NBC.

The tax returns acquired by The New York Times in many instances show little similarity to the annual disclosure paperwork Trump has regularly cited as providing a solid picture of his income. For example, the report indicated that the former president earned more than $434.9 million in 2018, although his tax returns revealed a loss of $47.4 million in the same year. While Trump has referred to the newspaper’s allegations as “absolutely false news,” he has failed to address any of its particular findings.

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President Joe Biden’s Tax Filings

Meanwhile, President Joe Biden, who was elected in 2020, has maintained the practice of openness by disclosing tax records until the 2021 tax year, when he and his wife Jill paid $148,687 in federal income tax on $610,702 in adjusted gross income. Biden’s pay as President of the United States was $378,333, while Jill’s compensation as a professor at Northern Virginia Community College were $67,116.

Do Presidents Get Paid for Life?

Former Presidents of the United States are eligible for a lifetime pension. The sum is equivalent to the Executive Level 1 salary of $219,200 per year.

Do Presidents Have to Publish Tax Returns?

The President of the United States is not required to release his or her tax returns; nonetheless, every president since Richard Nixon has done so voluntarily. It should be noted that previous President Donald Trump refuses to release his tax returns.

What Is Donald Trump’s Net Worth?

Donal Trump has a $3 billion net worth. The alleged $10 billion sum given by NBC in 2015 is thought to be exaggerated.

The Bottom Line

For decades, disclosing tax returns with the public has been one method for presidential candidates to alleviate concerns about potential conflicts of interest and demonstrate that they are following the same regulations as other taxpayers. While there is no legislation mandating this step, it is required of many Cabinet and sub-Cabinet appointees. Trump’s insistence on keeping his files private has raised questions about his true wealth and how much he has paid to the IRS. According to new disclosures from The New York Times, the former president may have chosen this tactic for a variety of reasons.

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