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Friday, October 07, 2016

Pruden: And now the season of October surprises

The season of “the October surprise” is hard upon us, but this year we’re getting the October surprise on the installment plan. There’s a medium-sized surprise with the morning paper every day.

The New York Times delivered what it thought would be the A-bomb late last week, with the news that Donald Trump had used the tax laws to count losses against tax liabilities to defer paying $916 million in taxes.

This October surprise was apparently meant to suggest that the Donald was either an incompetent businessman and couldn’t be the rich man he says he is, to run up losses like that, or an unpatriotic genius, to use the tax code to enable him to save his business and stay alive to earn again. Rudy Giuliani, the former mayor of New York City, called it “genius,” reminding everyone of the obvious, that the tax code enables every American, even an American despised by the “elite” media, to count losses against income.

This elite media was beside itself through the weekend, confident that The New York Times had finally fashioned a silver bullet if not an A-bomb, and the Donald would be destroyed once and for all, restoring civility, good table manners, peace in our time, free pot and soothing silence to the fractious land. Dean Baquet, the executive editor of the newspaper, was celebrated as a particular hero because he promised to go to jail to get the story in print. Bob Woodward, an editor at The Washington Post, said he would have printed it and wants to go to jail, perhaps to share a cell with Mr. Baquet.

The story collected considerable tarnish over the next few hours, however, with the news that The New York Times had avoided paying taxes on a pre-tax profit of $30 million, with a nearly identical legal exploitation of the same tax laws. (That was “different,” of course.) The Times not only got to delay paying its taxes, but through another loophole discovered by its million-dollar lawyers, it got a $3.5 million dollar refund. (Note to everybody else: “Don’t try this at home.”)

There may be a rest of the story. Federal law prohibits publishing an unauthorized tax return, with offenders risking five years in federal prison.

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