Tim Geithner and Tom Daschle Are No-Goodniks

I have enjoyed my visit at Concurring Opinions, but alas, my time is up and this will probably be my last (and maybe least) post.

I am one of those who is irked by the Timothy Geithner and now the Tom Daschle tax controversies. Geithner avoided paying tens of thousands of dollars in self-employment taxes. Then he paid back the part that he was forced to. Then, when his nomination as Treasury Secretary loomed, he paid the rest of it. And he wasn’t straightforward about his reasoning for the timing of all of this. Wags took the opportunity to argue that we need to reform the tax code, to make it simple enough that even the Treasury Secretary can follow it. Geithner was confirmed, apparently because none of the candidates who paid their taxes correctly were good enough for the job.

Now, Tom Daschle is facing similar issues. Nominated for Secretary of Health and Human Services, he amended his last three years’ worth of tax returns. Upon further reflection, he realized that he had failed to report hundreds of thousands of dollars in income, and that he shouldn’t have claimed some of the deductions that he took. He wrote a check for $140,000 and is now hoping for the best. It apparently wasn’t very challenging to get it right the second time around; why couldn’t he have had his “people” be equally careful in the first place? The most obvious reason is that nobody was watching then.

I agree with the idea that you can gauge how ethical someone is by how they behave when they think nobody is watching. Given the difference between how Geithner and Daschle behaved before and after people were watching, I think that they both fail the test.

I’m in a self-righteous mood about this right now, because I am doing my taxes this week and I found some old mistakes.

I use TurboTax, just like Geithner did. He blamed the program for failing to prompt him to enter his information correctly, which it probably didn’t. But there is good reason to argue that he should have known without the program telling him.

I recently found out that I had been double-counting a certain deduction. TurboTax asks about it twice, on the Schedule C and the Schedule A. If you have already entered it on the former, it warns you not to enter it on the latter. Unfortunately, I do the Schedule A first and I didn’t get prompted.

Still, I should have known better. When I realized the problem this week, I sheepishly went back through all of my old returns. I found that I had made the error in 2007, 2006, and 2004. I dutifully filled out 1040X amended returns for those years, wrote out some checks, and will file them next week. It’ll total $125 plus interest, which is not going to break me—but I can think of a lot of things I’d rather spend the money on.

The IRS would never come after me for any of this. They have bigger fish to fry. Even if they did come after me, the 2004 return is probably past their time limit to pursue me. So why am I doing it? And why have I done it in the past, over other innocent, small, but inexcusable errors? Not because I think I am ever going to be nominated to be Secretary of Health and Human Services, let alone imminently. Not even so that I can affect a holier-than-thou air if I ever meet Geithner or Daschle (though I reserve that right).

The reason is simple. I pay my taxes because I am supposed to pay them. If I make a mistake, I try to correct it. I’m not perfect, but I try not to make excuses. To say anything else—to say that I get to decide which taxes I have to pay, and which mistakes I have to correct—is to put myself above the law. That is not acceptable. It would set a horrible example for my sons.

Let me put it more strongly. Our leaders send the message that you only need to do the right thing if somebody is watching. Living that way borders on the sociopathic. But it doesn’t keep you out of the Cabinet. There are apparently more important qualifications for office than these.

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5 Responses

  1. hst says:

    You’d think that these people are Republicans, for all the problems they have with paying taxes.

  2. Brian Kalt says:

    hst, I’m not sure I see your point, but your handle reminds me of my favorite tax cheat story, Joseph Nunan:

    “Nunan was a former commissioner of the IRS (1944-1947) and in 1952 was busted for tax evasion. What sort of horrible fraud did he commit? Apparently Nunan won an $1,800 bet that Harry Truman would win the election, but forgot to claim his winnings on his taxes.”


  3. Frank says:

    I too am worried about this. But I’d be happier seeing monetary penalties keyed to the person’s wealth in situations like this, rather than endless journalistic debates about what level of mis- or nonfeasance disqualifies one from a cabinet post.

    I also wish the press would spend a fraction of the time currently occupied by scandals like this trying to analyze the massive, billion-dollar giveaways to various corporate interests that David Cay Johnston has chronicled in books like Free Lunch and Perfectly Legal. They’re the ultimate scandal.

    Finally, thanks for a great visit–we’ve all appreciated your consistently enlightening and insightful commentary.

  4. Confused2L says:

    Not to gloss over some of the very serious ethics questions raised by the timing and specific actions of these two men, I think the larger point, which is drawing too little attention, is that our tax system if inanely and insanely over complicated.

    One of the threads I see running through much of the early solutions being put forward by this congress is a tendency to try and slap patch corrections onto the underlying system, systems that are frequently flawed, over complicated, and burdened beyond there original design and plausible competency. Hopefully that will change with more time and room to maneuver.

  5. A.W. says:

    Confused, you are right, but… these two guys are not examples of this. These issues were as simple as actually reading documents handed to them (in the case of Geitner), and just realizing that a gift is income too (daschle).

    But i am sure you all saw the scrappleface post on this issue:

    Obama Plan Has Already Boosted IRS Tax Collections

    (2009-01-31) — In office less than two weeks, President Barack Obama has already increased tax receipts at the U.S. Treasury with an innovative plan to get tax-dodgers to pay up, in full, immediately.

    “The president’s plan is simple but ingenious,” said White House spokesman Robert Gibbs, “He targets wealthy individuals who filed inaccurate tax forms, cheating the government out of tens of thousands of dollars. Then he just nominates them for cabinet positions. They suddenly see the error of their ways, and they cut checks for the full amount owed, plus interest.”

    You can read the rest if you follow the url attached to my name.