Paul L. Caron
Dean


Thursday, January 15, 2009

More Fallout From Geithner's Tax Troubles

L.A. Times editorial: Timothy Geithner, the tax Code's Poster Boy:

The complex rules that trip up financial sophisticates such as Geithner are a minefield for the honest and a gold mine for cheats. It's long past time for Washington to whittle down the tax laws, stripping the layers of incentives and disincentives in favor of a system that simply raises the money needed to fund the government in a fair and equitable way. Then, perhaps, we can spend more time talking about nominees' expertise and less about their tax returns.

Miami Herald: Q&A on Geithner's Tax Mistakes:

One of the more egregious errors was that Geithner, over three different tax years, claimed that expenses for the summer camps he'd sent his children to qualified for the child and dependent-care tax credit. This credit is for working parents with children younger than 13 who send them to preschool or after-school care. IRS documents and commercially available tax software clearly define what qualifies.

"That's one anyone who has kids and has filled out that form knows that it's wrong. That's really odd," said Paul Caron, a prominent tax-law expert and associate dean at the University of Cincinnati College of Law.

National Review: The Leona Helmsley Administration:

If I happen to forget to pay some of my taxes, will the IRS say, "Hey, no big deal, no penalties"? Because they said that to Treasury Secretary nominee Tim Geithner.

New York Times editorial:  More Questions for Mr. Geithner:

As much as Mr. Obama and his team may wish it, however, the disclosures cannot be dismissed so easily, or papered over. The just-the-facts report of Mr. Geithner’s tax transgressions, compiled and released by the Senate Finance Committee, paints a picture of noncompliance that is considerably more disturbing than his supporters are acknowledging. ...

Many people find taxes baffling, but before his job at the I.M.F, Mr. Geithner was a senior official in the Treasury Department under President Clinton, and for the past five years he has been the president of the Federal Reserve Bank of New York. With that professional profile, tax transgressions are tough to excuse. 

Wall Street Journal Best of the Web Today:  Now You SE Him, Now You Don't: Will Gaithner's tax problem Sink His Nomination After All?:

In other words, as National Review's Byron York puts it, "he accepted payment from the IMF as restitution for taxes that he had not, in fact, paid." That seems worse than merely overlooking the tax obligation.

Wall Street Journal editorial:  A Geithner Tax Amnesty:

For our part, we are delighted that Mr. Baucus and Democrats are suddenly in such a forgiving tax mood. In addition to being a teaching moment for liberals, perhaps Mr. Geithner's tax snafu can do all of America some good. We'd suggest that Mr. Geithner and Mr. Baucus together set a new standard for the IRS in dealing with people who, like Mr. Geithner, make a boo-boo on their tax returns.

Let's have an amnesty -- with penalties waived, as they were for Mr. Geithner -- for all those Americans who somehow "forgot" to pay their taxes but are now willing to fess up or are audited. If forgiveness is to be the order of the day for the man for the man who may soon be responsible for the IRS, American taxpayers deserve a similar reprieve

Washington Post:  After Tax Errors Raised, GOP Leaders Defend Treasury Nominee:

Was he cheating on his taxes or just sloppy with his finances? Lawmakers vetting the nomination of Timothy F. Geithner to serve as Treasury secretary say they may never be sure. But leading Republicans nonetheless joined Democrats in leaping to his defense yesterday, calling Geithner's tax gaffes small potatoes compared with his qualifications for saving the global economy.

Prior TaxProf Blog posts:

https://taxprof.typepad.com/taxprof_blog/2009/01/more-fallout-from.html

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Comments

Talk radio reports that Geithner was reimbursed my his employer, the IMF, for the self employment taxes that he overlooked paying, and that the IMF informed him of this quarterly and at year end.

Of course the IMF would have informed him. Employment taxes are a big deal for any employeer, and they would want this properly handled.

If this report is correct, Geithner is a knowing tax cheat.

Posted by: Andrew_M_Garland | Jan 15, 2009 1:16:25 PM

So far Panetta is the only member of the Obama Administration that doesn't fit the Criminal stereotype

Posted by: btenney | Jan 15, 2009 1:41:48 PM

Umm.. the "Was he cheating on his taxes or just sloppy with his finances?" question is a bit irrelavant. Either situation would rule him out as Treasury Sec. Do we really want a tax cheat as the head of the IRS? Do we want a guy who is sloppy with his finances in charge of the US government's treasury?

Posted by: Ben | Jan 15, 2009 3:55:58 PM

No honest mistake? Not when you are given money to cover taxes you didn't pay. According to reports, employees are given 4 notices about their tax obligations. Are the tax rules difficult; yes, but everyone knows that SS taxes must be paid and each pay stub tells you whether or not they were. Rules for the smart, well educated, connected elite, though, I suspose are different. But not for me and you, we know that for a fact.

Posted by: amr | Jan 16, 2009 9:11:20 AM

If his defenders are to be believed at their word, at best he made many, many mistakes. More likely, this guy is simply a tax cheat who even when caught only paid up to the amount they caught him for.

This is a big country. Obama can find someone without such baggage who can fill this position. Maybe they should ask for applications....

And how about giving the rest of us the opportunity to voluntarily pay our Medicare and Social Security taxes!

Posted by: Fred Fry | Jan 19, 2009 12:56:01 PM

Did Geithner and Daschle pay any penalities for there tax cheating?

Posted by: BRUCE D GIESE | Feb 3, 2009 8:48:53 AM