Timothy Geithner, President-elect Barack Obama’s nominee for Secretary of the U.S. Treasury, didn’t pay his federal self-employment taxes for four years because he “forgot.” That is no longer a credible explanation in view of yesterday’s reporting by National Review’s Byron York. The claim that he forgot simply doesn’t square with the fact that for four years Geithner accepted reimbursement from the International Monetary Fund (IMF) to cover federal taxes he had not paid, according to Senate confirmation documents examined by York. The IMF is an international agency and as such does not pay federal or state taxes owed by employees who are U.S. citizens.
More specifically, he failed to pay self-employment taxes – Social Security or Medicare – while employed at the IMF until he was audited by the IRS in 2006. At that point, Geithner made good on his 2003 and 2004 obligations, but still failed to pay the amounts due for 2002 and 2001. It was only after he was named by Obama to succeed Henry Paulson at Treasury that Geithner took care of the obligations for 2001 and 2002.
This is especially damning because on the IMF’s Annual Tax Allowance Request, Geithner promised to “pay the taxes for which I have received tax allowance payments…” If, as The Wall Street Journal reported, Geithner was told by one of his accountants that he wasn’t obligated to pay the taxes, he shouldn’t have signed the IMF document promising to make the payments. Clearly, he should not have accepted the reimbursements.
Geithner also received an annual reminder from the IMF that he was responsible for paying his taxes. He applied for a reimbursement each year from 2001 through 2004, but then pocketed the cash instead of forwarding it to the IRS. Doing so four years in a row is not merely an “honest mistake,” as the Obama transition team maintains.
As a general principle, The Examiner believes presidents ought to be allowed to pick their cabinet officials and have them confirmed, except in cases in which there are clear and unquestionable ethical problems. Considering the dire state of the economy and the continuing possibility of scandal emerging from the opaque administration of the Toxic Asset Recovery Program, of which Geithner was an architect from his current position at the New York Federal Reserve, this is no time to complicate the economic crisis with an additional ethical complication. So unless he’s comfortable with appointing a tax scofflaw to oversee the IRS and the entire U.S. financial system, the prudent course is for Obama to withdraw Geithner’s nomination.
