How Donald Trump May Have Avoided Paying Medicare Taxes

Less than a week before the most contentious presidential election in recent memory, the New York Times has published an op-ed article explaining how Republican nominee Donald Trump could have avoided paying Medicare taxes in addition to the previously-reported income-tax dodge.

In the article, former IRS commissioner Fred T. Goldberg, Jr. and former Treasury Department official Michael J. Graetz -- both of whom worked under Republican President George H.W. Bush -- outline how they think Trump may have avoided paying taxes by reporting a salary of just $14,222 in his 2015 campaign financial disclosure form.

"By declaring such a low salary, Mr. Trump, we believe, avoided paying millions of dollars of Medicare taxes that should have gone to support senior citizens and their families," the authors write.

Since Medicare taxes are generally based on a person's salary and self-employment income, not total income, the article suggests that Trump was able to dodge the taxes by reporting the low wages. (High earners are also subject to a 3.8% tax on passive income, which helps fund Medicare.) Trump has not released his actual tax returns, so there is no way to verify the claims in his campaign disclosure form.

What we do know, however, is that Trump claims his meager 2015 salary came solely from the production firm that made his reality show The Apprentice and that he received no salary from any of the 200 or so corporations that he either owns or runs. That includes Trump Endeavor 12 Management Corp., which earned about $50 million in 2015, but for which Trump did not disclose a salary.

If Trump did use a tax loophole that enabled him to avoid paying Medicare and Social Security taxes on his 2015 income, he's hardly alone. As the Times notes:

The Treasury has estimated that these loopholes cost about $25 billion a year. Such schemes tripped up the presidential candidates John Edwards in 2004 and Newt Gingrich in 2012. It is now called the Gingrich-Edwards Loophole in their dubious honor.

Medicare insolvency is a hot-button issue this year, as politicians disagree about how to fund the entitlements program or whether it should be expanded. Funding for Medicare programs is expected to be depleted by 2034. While there are all sorts of factors that determine how long the program will last, tax avoidance strategies that deprive Medicare of basic funding don't help.