Does Geithner Deserve a Pass for His Poor Tax Paying Performance?

There always seems to be one incoming President’s cabinet nominee that turns into a fiasco. For awhile it looked like President-elect Obama’s oops would be Bill Richardson. Now Timothy Geithner, the nominee for Treasury Secretary looks to be the one to take the prize.

It seems Mr. Geithner, who as Treasury Secretary will have the IRS reporting to him, wasn’t as scrupulous as one might hope in preparing his personal taxes and also may have run afoul of the laws surrounding employment of aliens. Here are the reported facts this evening:

1. Mr. Geithner employed a housekeeper who was legally in the country and authorized to work in 2004. Apparently, her work visa expired three months before she quit her job with Mr. Geithner. He was unaware of the situation until it was pointed out to him by the Obama transition team.
2. Mr. Geithner was employed by the IMF from 2001 to early in 2004. The IMF does not withhold social security or medicare contributions from its employees paychecks though it does pay them half of the roughly 15% liability which equates to the employers’ contribution and furnishes them with income statements that show their liability. Mr. Geithner failed to pay to the IRS the contributions that were due based on his income from the IMF. This omission was discovered in an audit by the IRS in 2006 and he paid back taxes for 2003 and 2004. The payment included the amount due plus interest but the IRS waived the penalties. He had also not paid the social security and medicare contributions due for 2001 and 2002 but this was not discovered by the IRS as they were precluded by the statute of limitations from auditing his returns for those years.
3. The Obama vetting team discovered the failure to pay the 2001 and 2002 tax liability, advised him of his omission, and Mr. Geithner paid them in December.

Forget number 1, we’ve roasted enough good people over that one.

As for number 2, you have to wonder if we want a Treasury Secretary who can’t figure out a simple IRS Form 1040. I’m self-employed and that part about social security and medicare hurts big time every time I get to it. The spin is that it’s confusing for employees of the IMF and the State Department and blah, blah, blah. If someone is giving you money to cover their half of the liability and you put that in your pocket and then gloss over the fact you owe it, I have trouble buying the confusion argument. But give him a pass on that one. He tried to pull a slick one, got caught and paid up (how did he avoid the penalties?). It’s kind of an American tradition. Yeah, you got me here’s the money.

But number 3 gets a bit sleazy. You get caught, you’re the President of the Federal Reserve Bank of New York and if you play your cards right the world is your oyster. So you still try and scam the system when you get audited. Kind of in the best tradition of Wall Street, isn’t it? I still wouldn’t kick him out for this one except now the guy is starting to appear to be maybe not the brightest bulb on the porch.

OK, let it pass. We all know that Bernanke is the guy that we have to count on in this mess and Congress needs to spend less time on this trivia and more on saving the Republic. Besides, if they continue to muck it up sacking Geithner will placate the mob and the press will say good riddance to the tax cheat.

Comments

[market ace:]

This is the guy we are counting on to restore confidence to the financial system? This guy is a crook and a sleaze and to put him in charge of the nation's fiances is sick, but then who in congress is not just as bad or worse? Obviously he really knows how Wall Street works and probably has pictures of Madoff on his wall to worship as a hero. He should never be confirmed!!!

Jan 14 10:43 AM

[John Polomny:]

If he cant keep his own house in order what makes anyone think he can deal with the crisis facing the US economy. Dump him.

Jan 14 10:58 AM

[ChickenLips:]

He's busted, and willing to take shortcuts to get what he wants. We don't need another Bushie like that. I'm sure he makes the big bucks, who advised him on his taxes back then?

Jan 14 11:14 AM

[winslow:]

All crooks need to be penalized....both in business and politics. Let's start sending them to jail.

Jan 14 02:21 PM

[monday1929:]

I believe Geithner recognized the Derivative's systemic risks, but he did not have the guts to speak up forcefully. In other words, he is highly qualified for the job. And the Tax Cheating was just an early attempt to stimulate his local economy.

Jan 14 02:49 PM

[Tom Lindmark:]

Nicely put, monday 1929

Jan 14 03:46 PM

[Sailingwind...:]

Didn't we just have 8 years of an unaccountable administration, Geithner should be prosecuted and sharing a cell with Wesley Snipes not being nominated for secretary of treasury, if it was you or I surely we would have been hauled off to jail, I say lets nominate Charles Manson to head up the Department of Children & Family Services or Osama Bin-Laden for defense secretary.

Jan 14 08:01 PM

[User 337658:]

Yes, change we can believe in.

Jan 15 12:56 AM

[shootpar2001:]

Jumping on bandwagon.
How can someone who can not keep track of thousands($); be trusted to
oversee Trillions?
Criminal or mistake? Who cares; not qualified!!!!!!!!
As a self-employed entreprenuer, that form (Soc. Sec.) is rather easy and straight forward.
NEXT NOMINEE PLEASE!!!!!!!!!

Jan 15 11:05 AM

[Chancer:]

Let's call it what it is: tax evasion. Anyone who works in finance knows these laws. He does his own taxes. The media (who all back Obama) have universally banded together to call this an "innocent mistake" in an "obscure quirk in the tax law." So much for an independent and honest news media..

If this was an innocent oversight, this guy does not pay sufficient attention to detail to be qualified to be Treasury Secretary.

Jan 15 01:18 PM

[Stan Muse_:]

Just heard his senate confirmation testimony. Geitner is a fargin liar and an incompetent issue side -stepping bastion. The Senate should show him the door. The nerve of this guy to avoid taxes that are more than the annual average household income of most states - and call it a minor mistake!

Jan 21 01:48 PM