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Donald Trump’s Taxes and Hillary Clinton’s Emails: Legal, But Ugly

For leaders, legal isn’t good enough. The high-decibel debate over Donald Trump’s taxes is just the latest of many examples we’ve seen lately, and they’re all reminders to leaders that staying blamelessly within the law may keep them out of jail but won’t protect them from being disqualified by potential followers. Their standards are almost always higher than the law’s. Consider:

-Media on the left and right see the recent revelation of Trump’s operating loss carry-forward as big trouble for his campaign even though no one alleges it was illegal. Many voters can’t embrace a potential leader who, unlike them, may not have paid income tax for 18 years. It’s true that all that tax-free living resulted from his losing almost $1 billion, but how come such a disastrous loss didn’t prevent him from continuing to live in a Fifth Avenue penthouse and travel in a private jet?

Other apparently legal but unsavory behavior has bedeviled Trump. The Center for Public Integrity, which won a 2014 Pulitzer Prize, yesterday revealed that the Trump Organization did business with Iran’s Bank Melli, which federal authorities have linked to terrorism and Iran’s nuclear program. The Trump Organization has also sold apartments to the government of Saudi Arabia – perfectly legal, but Trump has attacked Hillary Clinton because the Clinton Foundation accepted donations from the Saudi government, which he said should be returned.

-Of course Clinton has her own problems of exactly the same kind. When the FBI decided in July not to make a criminal referral to the Justice Department in connection with her private email server, her campaign’s top talking point seemed to be “not indicted” – a weak claim for an aspiring president. Similarly, it was perfectly legal for her to collect millions of dollars from Wall Street firms for making speeches, but many voters think it smells bad.

Looking further back into her history, one finds a nearly endless trove of incidents with the same traits, legal but ugly. Making nearly $100,000 trading cattle futures, the mysterious disappearance and reappearance in the Clinton White House of law firm billing records in connection with the Whitewater scandal – she was never convicted of or even charged with any wrongdoing. But many voters just don’t like it.

Two people with clean legal records are nonetheless the most distrusted and least favorably regarded presidential candidates in the history of opinion polling.

It’s tempting to imagine that we’ve always demanded much more than strict legality from our leaders, but it isn’t so. Instead of “legal isn’t good enough,” there have been times when the opposite view prevailed: Illegal wasn’t bad enough. Starting in the 1920s Texas voters twice elected Miriam Ferguson governor on the explicitly stated basis that she would merely carry out the wishes of her husband, Jim Ferguson, who had been impeached as governor and barred from holding public office. In the 1990s, Edwin Edwards ran for governor of Louisiana on the informal slogan, “Vote for the crook. It’s important.” He won.

Those were the days.

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What We’re Reading Today

Wikileaks signals another document dump 
Founder Julian Assange said the organization would publish about one million documents that would impact the U.S. election, starting as early as next week. He did not say if the documents focus solely on Hillary Clinton, but he did say they’re not publishing the material specifically to hurt her presidential run. Reuters

Morgan Stanley accused of running sales contests
In Massachusetts and Rhode Island, the bank ran contests for employees selling securities-based loans, say Massachusetts regulators. The high-pressure games, officially prohibited by the bank, allegedly tripled loan originations. James Gorman‘s bank denies the allegations.  Fortune

Boeing’s accounting boosts profits 
Dennis Muilenburg‘s company uses “program accounting,” which defers costs of building airliners based on the number of planes the company expects to sell. The result is that Boeing includes expected future profits in current earnings. Critics say the practice prevents investors from knowing if the company is truly recouping its costs to build the planes. WSJ

Vice President candidates take center stage 
Mike Pence and Tim Kaine will debate tonight in a battle of the overlooked No. 2s. Pence and Kaine have softened the images of their running mates rather than attacking the opposition. That will likely change tonight. NPR

Building a Better Leader

Can the right type of breathing help you at work?
Focus on your exhale in order to activate the parasympathetic state (your calming system) without turning your mind into mush. Bloomberg

In order to invent something new…
…famed inventor James Dyson says he uses a meticulously slow process of trying to fix one problem at a time. There are far fewer ‘aha’ moments in his approach. Fortune

When it’s okay to let your star employee leave
Top leaders often go out of their way to get their best employees new positions elsewhere. Since they’re so talented and ambitious, you need to let them focus on themselves as well, which often means finding another opportunity elsewhere. WSJ

Trump Troubles

Conflicts in Trump’s tax return
In 1995, as Donald Trump was informing the IRS that he had lost nearly $1 billion, he also claimed to have earned only $6,108 in wages and salaries. But that was the year his casino empire in Atlantic City went public and he was paid a base salary of $583,333 (which doesn’t include stock options). While the Trump campaign didn’t respond to questions about the returns, it’s possible part of the salary wasn’t paid until after 1995. Fortune

Trump Foundation banned in New York
Last week it was revealed that the Trump Foundation doesn’t have the certifications necessary to solicit donations in New York. Now NY Attorney General Eric Schneiderman has ordered Trump‘s non-profit arm to cease fundraising in the state. Schneiderman gave the foundation 15 days to provide the documents necessary to operate in NY, as well as the financial audit reports for each year the non-profit operated in the state illegally. New York Magazine

Voters don’t realize that Trump was born into wealth
According to a new poll,  only 42% of Republicans and 53% of Democrats said they believed that Trump‘s father Fred Trump was wealthy. By the time of Donald Trump’s birth, Fred, a New York developer-builder, had run a hugely successful business for nearly 20 years. Washington Post

Fortune Reads and Videos

Google will unveil its VR hardware today
The new virtual reality headset will challenge Facebook’s Occulus Rift and will connect to Android phones.  Fortune

Target courts startups
The retail giant is looking for ways to improve its customer experience by asking early-stage startups to pitch pilot programs to try within Target stores. Fortune

Sears CEO: We’re not shutting down K-Mart
It’s the second time in 10 weeks that Eddie Lampert has denied reports that the company will soon shutter the K-Mart brand. Fortune

Sheryl Sandberg pens an ode to her late husband
The Facebook COO wrote a moving tribute on what would have been Dave Goldberg‘s 49th birthday. Fortune

Quote of the Day

As my children and I do every day, we miss him and mourn that he was taken from us so suddenly and so soon. We miss his smile, his generosity, his wisdom, and his love.

“Today is also Erev Rosh Hashanah, the Jewish New Year, when we say prayers celebrating the “birthday of the world. We focus on new beginnings, giving to others, and seeking forgiveness. We recommit to being better and working harder to move the world toward what it should be: more just, more equal, more compassionate, more kind.” — Sheryl Sandberg in a tribute to her late husband.  Facebook

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