As you’ve no doubt seen, we have a blockbuster story on the Trump tax returns front. In 1995, Trump declared almost $1 billion in business losses – generally tied to the implosion of his Atlantic City casino empire – and those losses have likely allowed him to avoid paying any income taxes for almost 20 years. Here’s the Times exclusive; here’s the version of the story at TPM. There are many moving parts of this story. But I thought I’d share some thoughts on parts I have some knowledge about.
First, a general point. At times like these, many people feel the temptation to impute hidden strategies to others when they see people flailing or doing stupid things. Did Trump maybe leak the documents on himself to get ahead of the tax story? Did he do it to distract from the Machado story? No. Of course not. All these ideas are preposterous. This is a deeply damaging story, both because of apparently not paying any income tax for many years while living a life of incomparable luxury and also because it puts hard numbers to the cataclysmic business failures that pushed Trump to the brink of personal bankruptcy in the early 1990s.
In itself the revelation is somewhere between very damaging and catastrophic. But that is almost a secondary question. The real issue is this: at the moment Donald Trump is clearly behind and there are little more than 30 days before the election. He needs a decisive shift in the race and he has very little time to accomplish that. Regardless of its specific impact, the tax story will probably take at least a week for the campaigns and the press to litigate. And that’s a week Trump simply doesn’t have to spare. In football terms it’s like being down two touchdowns with only two or three minutes to go and you turn the ball over to the other team. If they score, its fatal. But even if they don’t it’s almost as bad because they’ll run down time you don’t have.
Others say, “Well, it doesn’t matter. His supporters won’t care.” No, they probably won’t. But that’s not relevant. His supporters make up less than 40% of the electorate. Alone they get Trump a shattering defeat in Goldwater/Mondale territory. Right now Trump needs to hold wavering anti-Trump (but more anti-Hillary) Republicans and make serious gains with loosely-affiliated voters in swing demographics like suburban, married white women, college educated whites of both genders, etc. Saying he’s ‘smart’ not to pay any taxes gives feral Trumpers something to yell about. It has very little traction outside the committed Trump camp.
An entirely separate point.
In the course of not denying the gist of the original Times story, Trump’s campaign also threatened legal action against the Times. Is this a legit threat? Big picture: no.
This is actually a topic I know something about from years of running a news organization and working with media lawyers to do it. As a general matter, if documents fall from the sky into your lap, you are pretty much free to do anything with them you want – even if bad acts were involved as they made their way to you. It’s a very different matter, or can be, if you were in communication with or working with the person who committed the bad acts prior to their commission. This is an area where journalists need to be very careful. You can easily get into a situation where the bad actor becomes your ‘agent’ and you become complicit in the bad acts. Your 1st amendment rights give you very, very little protection if you commit crimes in the process of getting your material. If we take the Times account at face value (and there’s no obvious reason not to), this is clearly not the case. So if crimes or civil wrongs were committed in acquiring the documents, that’s not the Times problem.
There’s an additional advantage to the Times scenario. Even if you have no legal responsibility for bad acts, you can still get in trouble. A court may want to get at the person who committed the bad acts. And a court can compel a journalist to identify that person. If you protect that source you can yourself end up in jail – not for committing a crime but for refusing to divulge information about someone who did. Sometimes a shield law will protect you, often not, especially in federal court.
Years ago, back in 2007, I had to give a lot of thought to just this kind of scenario. In the years since I’ve worked with some of the best media lawyers in the business – ones who not only know the law but could give me solid, actionable advice. At the time I was consulting with someone who was great in the first category but not great in the second. That made me more risk averse than I might have been in subsequent years. But the same basic concepts apply. In this case I came into possession of a vast trove of documents related to a major news story of the day. I knew the identity of the source. And I knew that a bad act had been committed in acquiring them, though I had nothing to do with it and it had happened before I came into the picture. By the logic I described above, I was free and clear on that front. But I did know the identity of the bad actor.
Now, there was a personal dimension as well. At the time my wife and I had a son under one year old and I think (the precise date is cloudy in my mind) she was already pregnant with our second son. I knew it was possible that I could be compelled to divulge my source. (Remember this was around the time of the Matt Cooper/Judy Miller dramas – it really did have a chilling effect.) I gave this a lot of thought and realized that while I would never burn a source I was not in a position to go to jail over it. (Pregnant spouse taking care of a child alone, with absence that could tank my business and leave me out of work. No.) I should add, so as not to over-dramatize, pretty few reporters get sent to jail for contempt. But it does happen. You can relatively quickly into a situation where your lawyers can’t protect you. At that juncture, with the responsibilities I had, I didn’t think I could risk it. So I ended up not doing anything with the documents, other than gaining a lot of perspective on the story in question.
This is why the Times scenario is an ideal one from the media organization’s perspective. Getting an anonymous email is a textbook example of what is meant by the ‘falling out of the sky’ scenario. Not only does the Times have no legal culpability, it has nothing to divulge. It doesn’t know who the source is or what they did to get the documents. It’s as free and clear as you can get.
Now over the last dozen hours or so, there have been a number of references to legal culpability tied to laws prohibiting disclosure of tax records. The Post notes federal laws which bar publication of tax returns. But I’m pretty sure (though not certain) that those laws apply only to federal tax returns. These are clearly not federal tax returns the Times acquired. They’re tax documents for New York, New Jersey and Connecticut which reference a critical federal tax declaration. Not the same. I also think – and here I have much less knowledge – that comparable laws have been struck down on first amendment grounds when applied to third parties.
All of which is to say that as a legal matter, Trump has no leg to stand on. If I’m wrong about the law relating to the publication of federal tax information, maybe a prosecutor might, but not Trump. But the big picture is that the facts of this story are almost the ideal set of facts from the point of view of the media organization.
Needless to say, I’m not a lawyer. Don’t go out and get yourself in trouble based on this account. But news organization liability is very much my line of work and I’ve been advised by some of the best media and libel lawyers in the country for years.
In any case, given that the leak was of tax documents related to three different jurisdictions, it seems highly likely they were acquired not from a tax authority but from somewhere in the tax preparation process – an accountant, someone involved in their preparation or filing, someone who needs to sign them or get them signed. All of which is to say, the ‘leak’ is likely not anyone involved in government but rather someone involved with Trump. As Trump has said in other contexts: Sad!
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