In the face of news that Obama’s nominee for Treasury Secretary Tim Geithner failed to pay more than $30,000 in taxes in the early part of the decade and briefly employed an illegal housekeeper, the President-Elect and forces on the Hill are sending mixed signals on the fate of his nomination. His hearing has been pushed from Friday to next Wednesday. The Obama team, which has presided over an “otherwise smooth” transition, claims it knew of Geithner’s tax troubles before he was nominated, and determined they were honest mistakes that should not keep him from the office. The Senate Finance Committee began investigating the tax dodging on Dec. 5, interviewing Geithner and several of his accountants. Geithner, who would oversee the IRS, was doing his own taxes during the years in question. He failed to pay his Social Security taxes when employed by the International Monetary Fund, despite being given documentation that indicated he was required to do so. He also used “overnight camp” payments in calculating his dependent child credits for three years, and was informed by his accountant after the fact that the practice was not allowed. He did not file amendments to correct his mistakes, nor did he pay much of what he owed in back taxes until after he was nominated in November. Obama himself has stepped out to offer explicit support for Geithner in the wake of the news breaking:
Not an embarrassment for Obama, of course. Only Geithner, whose mistakes represent only a slight bump in the “exceedingly smooth” transition. Early indications show Geithner may indeed be in the clear, as Senators fret over the idea of having no one in place at Treasury from the get-go during these rough economic times:
A full-on P.R. press from Team Obama is being well-received by some on the Hill:
I’m not sure what difference it makes for how long Geithner’s housekeeper was illegal, nor am I at all confident that if I ever have tax troubles to the tune of 40K, they will be referred to as “hiccups,” “mishaps,” or “honest mistakes.” A cursory review of recent tax evasion cases reveals that steep fines, jail time, probation, and community service are usually the fruits of such miscalculations, not Cabinet positions. Geithner’s evasion is certainly smaller and more innocent than those of Wesley Snipes and Richard Hatch, but at this point, neither the man who would run the IRS, nor the man in charge of making tax law, can manage to file their taxes legally. Hope and change! Update: Well, this certainly looks more nefarious than the story Team Obama is telling. Geithner took reimbursement payments from the government for the self-employment taxes he was supposed to be paying while at the IMF, but never did.
