Thursday, January 15, 2009

A taxing issue


President-elect Barack Obama nominated Timothy Geithner, current president of the New York Federal reserve, for Treasury Secretary. A minor kerfuffle ensued when it came out that Geithner had not done a very good job paying his taxes for many years...

While working at the IMF from 2001 to 2004 he was supposed to, but did not, pay his own Social Security and Medicare taxes, in addition a several smaller issues (e.g. inappropriate deductions, avoidance of early withdrawal penalties, etc.). This has led to some questioning his fitness to be Treasury Secretary, especially given that this post is responsible for running the IRS.

Geithner advocates point out that he recently paid off the unpaid taxes and arrears, and dismiss the failure to pay as "common mistake," emphasizing the complexity of the nation's tax code. Others fault him more for the failure, pointing out that the IMF informs its employees of their obligation (and several times at that). Additionally, they question why he only paid the back taxes from 2003 and 2004 when a 2006 audit found the error, and not the shortage from 2001/2002. These were only paid shortly before his nomination, leading some to conclude that they were paid now because of the nomination (and that back in 2006 he had taken advantage of a statute of limitations to avoid paying for the two years.)

OK, so this blogger doesn't necessarily feel that Geithner's nomination should be rejected because of this. However, he would prefer a simple apology by the nominee rather than a passel of excuses. It seems to this blogger that the President-elect and his staff are being very dishonest in characterizing this as a "common" tax pay error, and by playing on most Americans' fear/hate of/at the complexity of the tax code.

After all, it would be blindingly obvious to the overwhelming majority of Americans if FICA taxes were not withheld from their paychecks, not something that would be easy to miss! So, Geithner had 26 reminders a year (assuming he was paid bi-weekly) for 4 years, in addition to the official reminders provided by the IMF.

Geithner's Tax History Muddles Confirmation

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