Immediately after Rachel Maddow’s show ended last night on MSNBC, I jotted down a few thoughts on Facebook, which follow:
1) Maddow tweeted she had “returns,” plural. That implied she had both full returns and multiple years. Neither was true.
2) We learned not much substantive from one year’s 2-page Form 1040. Without the schedules, we don’t know WHERE he got his income, which is much the more important question.
3) The long intro at the top of the show ground on a lot of people’s nerves, including mine, and for people who don’t watch Maddow regularly it probably was almost unwatchable. But she often has long intros that serve valuable purposes. In this case, it was valuable for two reasons: to provide background to low-info viewers, and to suggest future avenues of inquiry for other reporters.
All of that said, this was a 30-minute segment that someone unwisely stretched into an hour.
4) It’s a start. It’s a bloody start.
I had more thoughts, but I also wanted to go to bed, so I did. The additional thoughts follow, in no particular order:
While I’m sure MSNBC scored high if not record viewership on Maddow’s show last night, it did so at the cost of a big chunk of its credibility. It grossly overhyped what it had in terms of substance. Although Maddow (or the $25,000-a-year production assistant who actually runs her Twitter account) tweeted only twice before the show started, as noted in Point 1 above, even she implied that she had more substance than she really did. Maddow’s unspoken schtick has been that her show isn’t like the rest of cable news. That schtick took some big hits below the waterline last night.
Although I am not confident that Johnston’s source for his copy of the Form 1040 was Trump himself, as Johnston suggested it might have been, the two pages almost certainly were sent to him with Trump’s knowledge. (Johnston explains here how he got the return.) It smacked of what the Watergate-era Nixon folks called a “limited, modified hangout,” meaning they would admit to the absolute minimum truth that they could admit to without further damaging themselves. Because, after all, what did we learn about this? Trump earned about $153 million and paid about $37 million in taxes. Those numbers aren’t abnormal for people presumed to be rich. So for a lot of low-info viewers and voters, this release was the equivalent of Trump saying, “Here, see? There’s no THERE there! Lying media! Fake news! Thorax!” And a lot of those people will believe that. (More in a bit on what else we learned, most of which will fly over the heads of low-info viewers despite Maddow’s best efforts.)
Johnston’s own reporting on the Form 1040 is much less breathless and more substantive. Among his findings and observations:
- “Donald Trump was paid that year like a member of the 0.001%, but he paid taxes like the 99%. And by at least one measure, he paid like the bottom 50%.”
- “There is one clear expense, however, that can be discerned because portions of Trump’s 1995 state tax returns became public last fall. Trump got out of repaying nearly $1 billion he borrowed for his failed casino business. When you don’t repay a loan Congress says that money is income and you owe taxes on it immediately. Instead, Trump made use of an abusive tax shelter that Congress soon closed to newcomers. Like magic, the tax shelter converted what should have been a tax bill of about $360 million into future tax breaks. Ten years later, on his 2005 return, Trump was still saving tax dollars thanks to that tax shelter.”
Johnston also finds that the only reason Trump paid as much in income taxes as he did was because of the Alternative Minimum Tax, which he has said he wants Congress to abolish — a move from which he would benefit directly. And, he says, the return tells us more about the $916 million tax write-off contained in his previously-released 1995 state tax return — the write-off that led to suspicions that Trump had paid no income taxes for 18 years thereafter. Johnston explains it like this:
To understand the Trump tax returns it’s important to realize that America has two income tax systems. The regular income tax was supplemented by a parallel tax system, signed into law by President Ronald Reagan in 1986, called the Alternative Minimum Tax or AMT.
How these two systems interact is central to understanding the Trumps’ taxes.
Viewed in terms of the regular federal income tax system, here is what Trump did:
Trump reported $152.7 million of income. He also reported $103.2 million of negative income, the remainder of the roughly $918 million tax shelter he bought in 1995. That deal was disclosed earlier in three summary pages of his 1995 Connecticut, New York and New Jersey state income-tax returns.
That Trump had only $103 million of his $918 million tax shelter left in 2005 also tells us something about his past income. Using up the other $815 million of negative income in the tax shelter indicates that he earned an average of $81.5 million annually during the 10 years from 1995 through 2004.
Deducting the negative income lowered Trump’s adjusted gross income or AGI to $48.6 million. AGI is the last figure on the bottom of the front page of a federal tax return.
From that, the Trumps took $17 million in itemized deductions, which are not specified. That left $31.6 million of taxable income.
The Trumps paid just $5.3 million of regular federal income tax. Measured against their cash income of almost $153 million their federal income tax rate was 3.48%.
That figure is slightly lower than the tax rate paid by the poorest half of Americans. The half of taxpayers whose income was less than $33,485 that year paid 3.51% of their money in federal income taxes.
Trump’s total federal tax bill was larger, though, because of the Alternative Minimum Tax or AMT.
The President, in writing, has called for eliminating the Alternative Minimum Tax. Now we know one reason why—he lives like a king, but wants to pay taxes like a Walmart cashier.
All high-income Americans must calculate both their regular income tax and their AMT income tax and pay whichever is larger.
Most of that $103 million of negative income was ignored under the AMT, which meant that for tax purposes Trump’s income was larger than under the regular system.
The Trump income subject to AMT was $111.7 million, according to Daniel Shaviro, a New York University law professor who as a Congressional staffer helped draft the AMT three decades ago.
The Trumps paid $31.3 million in AMT which, together with the regular tax, made their total federal income tax $36.6 million.
Viewed in terms of their positive income of almost $153 million the total Trump tax bill came to 24%. That’s in the range paid by two-income career couples who both work all year to earn about $400,000. The Trumps income was $418,460 per day.
So Trump is, to be kind, manipulating the tax system to pay a lot less tax than a person earning as much as he might be expected to pay. But you know what? A lot of rich people do that. It shouldn’t be legal, but it is, and it probably always will be as long as rich people are the only ones writing the tax code.
Still, this wasn’t a non-story. Seth Abramson, in this thread on Twitter, wrote last night that we actually learned some other important things:
- We got confirmation that Trump has been lying about not being able to release his 2005 and other returns because they’re being audited.
- We therefore have reason to believe that if the White House has reason to think other returns might be released soon, it may do so on its own.
- Someone, somewhere who had access to at least some part of Trump’s tax returns was able and willing to send them to a reporter, with or without Trump’s knowledge. (And I would add that he knew to send them to Johnston, perhaps the most qualified reporter on the planet to address them.)
- Maddow’s and Johnston’s publication of the return proves that the press is willing and able to publish the material despite allegations that doing so is illegal. (The 1971 Supreme Court case on the Pentagon Papers backs this up, by the way.)
- Trump made only $150 million or so in 2005 despite the housing market’s still being way up at that point. (I have said all along that Trump’s claim of a $10 billion net worth is bullshit; Abramson thinks this return confirms my suspicions.)
- Trump may have lied to the FEC at some point, which would be a crime. (Maddow touched on this too last night, but I admit she was talking so fast I wasn’t clear on the details.)
- The White House now has a “tell” that the press and public can use to gauge its responses to any future revelations regarding Trump’s taxes: “The WH’s willingness to talk about this return sets a standard we can use later on if/when the WH balks at discussing other returns. Indeed, the moment the WH reacts differently to the possible release of a tax return than it did tonight, we’ll know something’s up.”
One last thing: My friend Dan Romuald wonders whether the White House might have made a copy of this one particularly nonthreatening 1040 available to certain White House staffers suspected of leaking to the press, to see whether they could catch a leaker in the act. That, too, is possible and would not be out of character for this administration. I like my modified-limited-hangout scenario better. But that’s just a gut feeling. I could be wrong.
So where do we go from here? In search of more tax returns — the whole things, not just the two-page summaries. I would not encourage anyone to do anything illegal to get them, but in the unlikely event Congress gets sufficiently incensed, that wouldn’t be necessary: Congress, as we saw during the Clinton and Obama years, can subpoena anything it damn well pleases and probably get it. And if more news outlets get returns in their mailboxes with no return addresses, they need to publish them (after verifying their authenticity, of course). It’s perfectly legal and it would be a huge public service.
Because at the end of the day, there’s still a huge question hanging over this country: To what extent do our so-called president’s financial and political ties to the Russians allow Russia undue influence over American policy? Keep in mind that 1) for all Trump’s praise, Vladimir Putin is and always has been a dictatorial, murdering fuckhead (to quote Eddie Izzard), and 2) the Russian government, the Russian banks and the Russian Mafia are all pretty much the same thing.
Trump’s tax returns — in full, all of them — would be the quickest, easiest way to answer that overarching question. And I’m not the only one willing to bet dollars to doughnuts that that’s why he has been keeping them hidden.