I was watching MSNBC last Tuesday evening. That’s no major revelation nor is it anything unusual. What was unusual was the hype the network gave to The Rachel Maddow Show that evening. Perhaps with the benefit of hindsight I understand what really happened a bit better. Let’s explore.
I have tremendous respect for Dr. Maddow and consider her to be the wisest political news analyst on American television. We are both progressives so we agree philosophically but my respect goes well beyond that. I find her quiet insightful and amazing at connecting the dots. Tuesday night’s show was dedicated to revealing the summary sheet of Donald Trump’s 2005 1040 tax form. On the surface the show and its “big reveal” was more of a dud than a bomb. Maddow had to know that. Why did she allow and in fact fan the flames of the hype? I think I might now have the answer.
The information came to Maddow via David Cay Johnston – who the next morning Trump referred to as an unknown reporter. For the record Johnston is a well-known and respected journalist who among other things has written for the New York Times, authored several books (including one on Trump), won a Pulitzer Prize and been on the faculty of Syracuse University. He is far from an unknown! Johnston claims (and we have every reason to believe him) that the document came to him anonymously in his home mailbox. Remember that several months ago a few New York State tax documents of Trump’s were anonymously delivered to the media apparently coming out of Trump Tower. The current leak had a Westchester County (suburban New York City) postmark. I’m just speculating here. But I’m of the school of thought that Trump was either the leaker or ordered the leak in both cases.
On the surface the 2005 documents actually make Trump look rather good. He made about $150 million that year, donated about $600,000 to charity and paid taxes albeit at a rate of about 25%. Let’s look at that a bit closer.
The earnings look good because they look like the earnings of a man worth about $10 billion (Trump’s self-claimed net worth). Most experts gauge his net worth at more like $5 billion. Many people feel one of the reasons Trump won’t release his taxes is that they will prove that he is not worth as much as he says he is.
There is reason to believe that 2005’s $600,000 is the last significant charitable contribution Trump made. To put those big numbers in perspective the $600,000 is four-tenths of one percent of Trump’s declared 2005 income. That is like a guy or gal earning $50,000 only donating $200 to charity for the year. Most Americans do much more than that. Now consider that the $600,000 is rumored to have gone to the Donald J. Trump Foundation. Effectively Trump gave the money to himself. (Suddenly my very modest charitable donations make me look like a philanthropist.)
Here is the big issue that Maddow brought into the conversation which will be a factor as Trump and the GOP begin attempting to restructure the tax code to benefit the wealthy: the Alternative Minimum Tax (AMT). Most Americans have never heard of it, few understand it because it effects only about the top 3%.
The law is complex and has levels to it. In a nutshell it is designed to prevent high earning individuals from wiping out their entire tax liability with deductions. That provision was responsible for the bulk of the federal taxes Trump paid in 2005 and he wants to repeal it.
Repealing the AMT was also part of Bernie Sanders’ platform. How could Sanders and Trump agree on something in the tax code? Trump is against it because he and many of his financial backers are simply greedy. Sanders is against it because it is inequitable. It was meant to keep the super-rich in check but it is now negatively impacting the buying power of many who are simply doing very well financially but are far from wealthy.
Again I’m generalizing, but the AMT starts to kick in around the $200,000 in earnings mark. Certainly a comfortable income for most Americans but far from the lifestyles of the rich and famous! Here is the real rub: it impacts more than three times as many Americans in the $500,000 to $1 million earnings range as it does those earning over $1 million. It has become a regressive tax that actually depresses the thing the economy needs the most – consumer demand.
I’m in the Sanders camp (no surprise there); I want to correct the inequity and regressive nature of the AMT. The Trump camp just wants to pay less in taxes and if the resulting revenue shortfall becomes a problem they’ll just cut out another program that protects the environment or aids the poor.
The AMT is going to become an issue down the road and Maddow brought it into the national conversation. I knew she had to be smart enough to know that releasing the “cover sheets” of one year of federal taxes didn’t tell us nearly enough about Trump.
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