The supposed bombshell release of President Trump’s 2005 tax return on Tuesday night was more of a firecracker. After much hype and a 20-minute delay that made the program feel more like a reality television show than a commentary on the news, MSNBC’s Rachel Maddow revealed that through veteran reporter David Cay Johnston, she had acquired the first two pages of Trump’s form 1040 for tax year 2005.
The document shows that Trump paid about $38 million in income tax that year, on income of close to $150 million, after a massive write-off of $103 million in business losses. Johnston said that he had received the documents “over the transom” and that he had not solicited them, nor did he know who had mailed them to him.
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Despite the hype on MSNBC Tuesday night, though, the documents answer almost none of the real questions that have been driving people to demand that Trump, like presidents before him back to the 1970s, releases his tax returns to the public. Among them: Does Trump have significant business ties to Russia, or to other foreign governments that could create conflicts of interest as he pursues US policy overseas?
The problem is that for a return as complicated as Trump’s no doubt is, looking at the first two pages is equivalent to reading the front and back covers of a book and ignoring the hundreds of pages in between. It gives you a general idea of what’s going on but is woefully short on details.
For example, take Line 12 on the 1040 where Trump reports $42,395,804 in business income for the year. Yes, we now know a little more about Trump’s finances, specifically that he pulled down more than $42 million from the operation of various businesses. But we have no idea which of his many businesses generated all that income, or how. Much of that information would be contained on the IRS Schedule C that was presumably filed with the return, but which was not included in the documents Johnston received.
Or look at Line 17, on which Trump reported $67,383,658 in income from “rental real estate, royalties, partnerships, S corporations, trusts, etc.” We get the bottom line number, but not the breakdown of what exactly those partnerships and trusts look like, where they are located, and who Trump may be doing business with. All that would be detailed on IRS Schedule E which, conveniently, wasn’t part of the package either.
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There is also no detail about the more than $9 million in interest payments Trump received in 2005 or the more than $32 million in capital gains he realized during the year.
The biggest mystery the release of those two sheets of paper solves is the question of whether Trump paid any taxes at all in the years after a filing in 1995 in which he reported a loss of nearly $1 billion. That loss made it theoretically possible that using IRS rules that allow losses to be carried forward, Trump could have paid no taxes for up to 18 years.
It turns out that wasn’t true, at least in 2005, but that’s about the only revelatory part of the documents.
Johnston seemed to acknowledge as much when he pointed out early in his appearance on Maddow’s show that he couldn’t discount the possibility that Trump himself had caused the documents to be leaked, citing Trump’s history of such activity during his years as a tabloid-obsessed Manhattan real estate developer.
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Indeed, much of the speculation surrounding the unexpected appearance of the documents Tuesday was focused on the idea that it was an attempt by Trump or his supporters to distract attention from the other story dominating the news: the damaging report by the Congressional Budget Office that found the health care bill proposed by House Republicans and backed by Trump, would cost 24 million Americans their health insurance.
Regardless of where the documents came from, the White House made a show of righteous indignation. On Wednesday morning, Trump tweeted, “Does anybody really believe that a reporter, who nobody ever heard of, "went to his mailbox" and found my tax returns? @NBCNews FAKE NEWS!”
(For the record, Johnston was a longtime reporter on tax issues for The New York Times and is a Pulitzer Prize winner. People have, in fact, heard of him.)
On Tuesday night, the White House released a statement blasting MSNBC and Johnston.
“You know you are desperate for ratings when you are willing to violate the law to push a story about two pages of tax returns from over a decade ago. Before being elected president, Mr. Trump was one of the most successful businessmen in the world with a responsibility to his company, his family and his employees to pay no more tax than legally required.
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“That being said, Mr. Trump paid $38 million dollars even after taking into account large-scale depreciation for construction, on an income of more than $150 million dollars as well as paying tens of millions of dollars in other taxes such as sales and excise taxes and employment taxes and this illegally published return proves just that. Despite this substantial income figure and tax paid, it is totally illegal to steal and publish tax returns. The dishonest media can continue to make this part of their agenda, while the president will focus on his, which includes tax reform that will benefit all Americans.”
Interestingly, the Trump administration’s decision to bring up the president’s tax reform plan in the statement calls attention to one more interesting fact revealed by the return. Trump’s effective tax rate in 2005 was a little more than 25 percent. But the only reason he paid as much as he did is that he was subject to the Alternative Minimum Tax, designed to assure that the very wealthy pay some taxes even if their income and deductions are structured in a way to avoid all tax liability.
Trump’s tax proposals include the elimination of the AMT.
