Maddow Steps on a Rake: 4 Takeaways from her Epic Fail

Rachel Maddow’s failed report on the Trump tax return just underscores why the mainstream media can’t be trusted. In revealing the front and back of Trump’s 2005 Form 1040, Maddow’s plan backfired by proving there is no rational basis to continue to call for his taxes to be released. The voters were correct that this is a non-issue, she and Johnston (who apparently found these in his mail box) may have broken the law to smear Trump, and her reporting relies on innuendoes and suppositions while omitting facts.

An October 1, 2016 New York Times reporter wrote: “Donald J. Trump declared a $916 million loss on his 1995 income tax returns, a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years, records obtained by the New York Times show.” It was later asked about at the presidential debate and Clinton stated Trump refused to reveal his tax returns for one of three reasons: First, maybe he’s not as rich as he says he is. Second, maybe he’s not as charitable as he claims to be. Or maybe he doesn’t want the American people, all of you watching tonight, to know that he paid nothing in federal taxes.

  1. What the Return revealed: The Tax “Return” (only the front and back of form 1040), revealed approximately $38 million paid in taxes on $153 million (effective rate of 25%) in claimed income and $103 million in loses.

This refutes the claim of not paying taxes.  Because of the loss claimed, Trump would have paid zero in taxes; however, the Alternative minimum tax kicked in and brought his taxes paid at over $38 million. He also paid “millions of dollars in other taxes such as sales and excise taxes and employment taxes,” a Whitehouse official noted in an official statement.

RMhorseThe argument has been raised that the effective tax rate paid by Trump is unfair under the AMT because individuals who make far less, pay a much higher effective tax rate.  However, this argument is a misdirection as Trump also incurred $103m in losses which would have reduced his taxes to a far lower rate. Under the tax code, Trump wasn’t allowed to take the loss to fully reduce his taxable income and was therefore mandated to pay $38 million in taxes despite the loss. Those individuals earning less, but in a higher tax bracket, didn’t suffer a huge loss which they can’t deduct. Essentially, it’s an unfair comparison which conveniently ignores the loss Trump suffered but couldn’t utilize to offset his tax liability (look for our upcoming primer on the Alternative Minimum Tax and arguments for and against it going away).

The decision to not release tax returns is a non-issue: any information revealed would be tenuous—at best–and the voters don’t care. 

  1. There are no laws requiring an individual running for president or a sitting president to release his tax returns.

The arguments for Trump to release his tax returns started out in the debates with three arguments being advanced by Hillary Clinton (noted above). 1. On the level of his wealth:  He has enough indicators of substantial wealth such as his 2005 return, his own jet, multiple businesses and helicopters—does it really matter if he is worth $500 million or $10 billion? I don’t think so. I think he has enough wealth to indicate he is a savvy businessman. 2. On his charitability: There are multiple incidents of anecdotal evidence of Trump’s charitable giving: loaning his plane, writing out checks to individuals in need, etc. How much does he need to give for his opponents to be satisfied with this issue? This is a slippery slope and if he gave 10 million away to charity a year, his opponents would claim” That’s hardly anything compared to his wealth.” 3. On Paying Nothing in Federal Taxes: Put this issue to bed—he clearly pays personal, business, employment, and sales tax. Because none of those lines have yielded any fruit, the opposition now insinuates that he is hiding his dealings with criminals and Russian oligarchs.

Most criminals don’t attempt to deduct expenses on their tax returns—is there a Schedule ‘N’ for nefarious? Secondly, any connections that might be revealed, still don’t prove anything.   In fact, considering Trump has been engaged in real estate development and casinos since the 80s and he is continually audited, then people far smarter than Rachel Maddow would have likely charged him with criminal conduct a long, long, time ago had that been an issue. As Rachel is fond of saying, this just doesn’t make “factual sense.”

Assuming—and this is a big assumption—that there are any business connections to Russians on Trump’s tax returns, what does that prove? Criminals enter legitimate business transactions all the time. No one accused their landlords of being criminals because they accept their rent. There must be some indication of criminal activity on Trump’s part to even get a warrant. This is no more than a fishing expedition to keep Trump on the defensive about his businesses and taxes. These manufactured issues were raised prior to the election and Trump still won. The media doesn’t understand that the public can see through this and really doesn’t care about it. It’s political and enough people realized that to vote for Trump anyway.

As a result of Maddow’s clear misstep, this, I think, is where our focus should be:   Where did they get the copy of the return; and did they break the law?

  1. David Johnston claims that the tax return was in his mailbox. However, regardless of where/how the information was obtained (and there may be other laws preventing this but we need more facts), U.S. Code Section 7213(a)(3) provides:

It shall be unlawful for any person to whom any return or return information (as defined in section 6103(b)) is disclosed in a manner unauthorized by this title thereafter willfully to print or publish in any manner not provided by law any such return or return information. Any violation of this paragraph shall be a felony punishable by a fine in any amount not exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the costs of prosecution.

Setting aside the issue of the theft of the information, the disclosure and dissemination of the tax return is what is contemplated by this statute. It clearly indicates that printing or publishing (i.e. dissemination) of the return or return information is felony. In addition, there are certain civil causes of action which also might be applicable to Maddow.

Maddow claims that her First Amendment freedom of speech allows her to publish this information. However, this—much like most of what Maddow says—if way off the mark. All freedoms have some underlying policy limits. You may have freedom of speech, but you aren’t allowed to scream “fire!” in a crowded theater. Freedom of speech doesn’t allow you to circumvent a criminal statute. Perhaps the most important point is that Maddow and the mainstream media will risk criminal penalties for a story that has no substance to perpetuate a narrative which has no proof. That should worry everyone.

On a side note, David Johnston began his discussion of the return by indicating that Trump may have himself leaked the return.  We discuss this later, but there really are two issues: 1) how the return was obtained; and 2) the dissemination of the information.  We are concerned with the latter and it is the latter that the statute addresses.

  1. The newscast relied exclusively on supposition and innuendo and the conclusions drawn were specious, at best.

David Johnston claimed that Trump “has a long history of leaking things about himself when he thinks it’s in his best interest” and that Trump’s reluctance to release his returns is because he is hiding something.  Then Maddow claimed a 2008 sale to a Russian netted Trump a dump of millions of dollars into his coffers for “inexplicable” and “no discernable” reasons.  This is sheer speculation with no basis in fact- hardly respectable journalism.

Johnston and Maddow’s claims that Trump’s refusal to release his tax returns because he is receiving money from foreign governments and Russian oligarchs might carry more weight if, in fact, these “journalists” were equally as aggressive at pursuing similar lines of inquiry against Hillary Clinton, the Clinton Foundation, and money she received from foreign governments while Hillary was Secretary of State. Interestingly enough, they haven’t pursued the Clinton’s receipt of foreign money as Secretary as State—which isn’t speculation, but declared fact. Neither have they asked Clinton why she refused to release her emails, or had a private server, or why she scrubbed 33K emails, or why her server technician invoked his 5th Amendment right against self-incrimination, or disobeyed a subpoena to appear before Congress. I would expect just as much “unrelenting” inquiry on those issues if there was true objectivity and a desire to protect democracy and the public.

Johnston also supported his conclusion that Trump “has a long history of leaking things when he thinks it’s in his best interest” by citing two examples. Interestingly, if you watch the video clip of Johnston while he is discussing these examples, he slips in qualifiers in both examples with the word “may.”  “Trump may have leaked…” Why would you draw a conclusion and base that conclusion on two examples that you qualify with the word “may?” If Trump did it, say he did it. If he didn’t do it, don’t cite it as an example of your conclusion that he leaks things. This an example of the main stream media misleading and manipulating the public for their own purposes.

Maddow had her own problems.  As evidence of possible collusion with Russian oligarchs, Maddow cites as evidence a 2008 sale of a Palm Beach Florida property.  Essentially, Maddow relies on the following facts: Trump bought the property In 2004 for $41m, and sold it “inexplicably” in 2008 to Russian billionaire Dimitry Rybolovlev for the sum of approximately $100m and for no “discernable” reason nets an additional $60m.  She claims this must be evidence of collusion. Again, Maddow leaves out certain facts: 1) the property was bought at a bankruptcy auction for $41m; 2) Trump renovated the property with an investment of approximately $25m; 3) the property was sold for $95m. So, Trump buys a property. He renovates it with an investment of approximately $25m. He then sells it for a profit of approximately $29m. I think it’s called “real estate development” – it’s a legal occupation and it’s what he does and how he makes a living. Is it reasonable to say that 8 years ago, he sold it to a Russian oligarch in the hopes that 8 years later, he might run for president, and might win and thereby the Russians have influence over him? Aside from leaving out the fact that he spent $25 million renovating a property that is already in one of the richest zip codes in the country, the supposition and innuendos have no rational basis and defy all common sense.

Now maybe Maddow could argue that in the past 8 years, this relationship with Dimitry has been cultivated to establish some sort of relationship that gives him undue influence over the president. Maybe. But 1) you aren’t going to find that on a tax return; 2) you must have some facts establishing this; and 3) you won’t get there by misleading the public and omitting pertinent facts. If Maddow spent as much time digging into stories about unemployment, our crumbling school system, and disseminating actual facts, she might be a trustworthy reporter someday.

The mainstream media loves to tout itself as a “fourth branch of government.” Its claimed role is to hold government accountable.  But doesn’t this assume that the media itself is unbiased and honest?  Who holds the media accountable for the stories and facts it presents?  Who is the media to tell the people what the important stories are and what conclusions to draw?  Three weeks prior to the election, Hillary Clinton had “won the election” and the media bias in her favor was palpable and blatant. It continues to this day. If the mainstream media can’t report the facts openly and honestly and wants to sell its own agenda—then they need to state that their stories are in fact editorials.  And yet, the media wonders why no one trusts them and how Trump won the election.