Thursday, January 15, 2009

An honest mistake?

A plumber owed $1,000 in taxes that he didn’t even know about… …and it was headline news!

Yet, Timothy Geithner, Obama's designated pick for Treasury Secretary owed $26,000 in back self-employment taxes and it doesn't seem to be be a big deal.

What's up with that?

To be fair, I've been behind on taxes myself before--not a good place to be, but I knew about it, and eventually got straight with the Feds. To be fair, this guy paid what he owed when informed of his, um error. But this guy works at a Federal Reserve Bank. He's being proposed as Treasury Secretary. He's supposed to mastermind our economic recovery. The IRS is part of his Department.

And he forgot?

There are more than enough simple tax programs out there that will walk you through the necessary calculations--it's not a big deal. And I'm not really concerned about this guy's mistake. Maybe it shouldn't disqualify him for a Cabinet post. But if he had been a Bush nominee, or a plumber . . .

Others are not so forgiving. Here's what one blog commenter had to say:
Why would anyone neglect to pay taxes? Forgot? Not a good sign. Procrastination? Not good. Didn’t know about it? Maybe o.k. for a plumber, but… Above it all? Won’t get caught? Didn’t have the money? (I’m self-employed, too, and I make sure I have the money). Doesn’t believe in taxes? Can you think of one good reason for not paying taxes that portends well for a Secretary of the Treasury? I’d feel better.

I wonder if Biden is questioning his patriotism.

1 comment:

Sean said...

The thing I can't figure out is why aren't "conservatives" hailing this man as a hero and a patriot. Surely he deserves the same deference that President Bush did, when he received a $14 million dollar windfall:

"A review of George W. Bush’s 1998 tax return reveals that he reported the sale of his share of the Texas Rangers baseball team as a long term capital gain. As a result, he paid a tax on the more than $15 million proceeds at a tax rate of 20%, as opposed to the 39.6% rate on ordinary income. According to a press release dated June 18, 1998 from the Dallas Morning News, Bush paid $606,000 for about 1.8% of the team and became the managing general partner of B/R Rangers Associates, Ltd., a limited partnership that owned the team. Under the terms of the agreement, Mr. Bush was given an additional 10.2% of the proceeds as additional compensation if the team was sold. The incentive compensation became effective if the other partners received their entire investment back plus a 2% return per year…

According to IRS Revenue Procedure 93-27, “The receipt of a partnership capital interest for services provided to or for the benefit of the partnership is taxable as compensation.” As most people know, compensation is taxed as ordinary income, subject to the highest tax rates; in this case 39.6%. Mr. Bush treated the incentive portion of his proceeds as long term capital gain, and accordingly reduced his tax liability by at least $2.4 million.

This is exactly the sort of gambit used by former Illinois governor Otto Kerner, who was convicted of tax fraud as a result:

In 1972, Gov. Kerner was convicted of income tax fraud for influencing public policy that benefited his holdings in a race track corporation. On the advice of his accountants, Gov. Kerner treated the proceeds ($180,000) of his race track stock as long term capital gain subject to the reduced tax. The U.S. Attorney, James Thompson, prosecuted Gov. Kerner for falsely treating these proceeds as a capital gain because Gov. Kerner’s public policies had a substantial effect on the appreciation of the stock…"

I'm thinking this is the first you've heard about this.