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Treasury to be run by tax scofflaw

Posted by Richard on January 14, 2009

I seem to recall that the Obama transition team had a detailed questionnaire for potential appointees, some 16 or 20 pages long. One of the questions was, "Do you own a gun?" I wonder if there was a question like, "Do you always pay your taxes?" Because apparently, at least one Cabinet nominee would have had to answer no:

President-elect Barack Obama's nominee for Treasury Secretary, Timothy Geithner, failed to pay Social Security and Medicare taxes for himself for four years and employed a housekeeper whose immigration documentation lapsed while in his employ.

Geithner disclosed to senators earlier in the day that he had failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication in an otherwise smooth path to confirmation. 

… He paid all of his income taxes on his IMF income, but made a "common mistake" on his tax returns with regard to self-employment taxes, Obama transition aides told reporters Tuesday.

"Common mistake," my ass. While doing consulting/contract work, he failed to pay some or all of his Social Security and Medicare taxes. Trust me, I paid self-employment taxes for over a decade and know whereof I speak. Failure to pay those taxes (or to pay the correct rate, which is twice that of wage earners) may be a "common mistake" among self-employed handymen, plumbers, etc., with a high school education (although I doubt it's all that common). But the paperwork isn't that complicated and the instructions are quite clear. Anyone who can't figure out what they owe in self-employment tax isn't qualified to be a bookkeeper, much less Treasury Secretary. It's unlikely that Geithner is that grossly incompetent, so I don't buy the "honest mistake" claim.

The news report I heard said the IRS audited Geithner in 2006 for two of the four years and billed him for the unpaid taxes, but waived penalties. I had one experience with the IRS claiming I owed additional tax (they disallowed a deduction), and they didn't treat me so kindly. Of course, I wasn't president of the New York Federal Reserve Bank at the time.

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