Been following the approval hearings in the US for two of Obama’s appointments, first for Timothy Geithner and now for Tom Daschle and Nancy Killefer. So I do not know these people, so I am not passing a moral judgment here and I have no idea of how easy it is to do the kind of tax mistakes that these two have done. What I do not understand though is how its possible that someone with incomes ranging in the hundreds of thousands a year, end up sitting at home doing their tax returns themselves instead of using a professional accountant? I mean it is a given that when you have that level of income there will be complex tax issues that you want to handle properly, especially if you operate in the political sphere where everything you do is heavily scrutinized. And even if they consider themselves competent enough to do these kind of tax returns, do they really have the time?

I mean if I where a politician one thing I would feel compelled to do was to make sure I had an accountant making sure my taxes was a 110% correct as no matter how innocent the mistake made would come out looking very bad as these 3 cases prove.

13 thoughts on “Why?

  1. US tax system is way too complex and even accountants will not help you much, for example: one of those guys had a friend pay for their car and driver. He reported that as a gift, but apparently it should have been reported as income which even hi accountants did not realize.

    US tax system is far beyond the comprehension of normal human beings, even if they study it full time. In needs to be torn down and rebuilt as something much simpler.

  2. At least Daschle had an accountant, and forgot to provide the accountant with some information (though I don’t understand how he could owe so much tax for the use of a car and a driver). Geithner was employed by an international organization (the IMF), which didn’t have to withhold the employer’s share of Social Security (pension) taxes, though US citizens still owe that tax; this is what Geithner failed to pay.

  3. Concur that the tax code is… insane. And yet, you’d think top ranked politicians would, just out of their instinct for self preservation, hire top ranked accountants as well. On the other hand, maybe they’ve realized they can get away with it. When the tax code is insane, who *doesn’t* cheat a little?

  4. maybe these liberals should just “””””pay your taxes”””””, just like us “real” americans.

  5. From http://online.wsj.com/article/SB123194884833281695.html

    In 2004, an accountant advised Mr. Geithner in writing that he did not owe employment taxes. An accountant who reviewed Mr. Geithner’s 2001 tax return also didn’t inform Mr. Geithner he owed taxes, according to an Obama aide familiar with the situation.

    The article goes on to say that he got conflicting advice from several sources and that he eventually managed to get some years correct but didn’t get the earlier ones correct.

  6. You are wrong. Every delegate must do it’s own income tax. They were it who have decided to make them as they are. So what you suggest is that the laws are good and that’s the really bummer. Why must anyone pay consultants for such a simple thing like taxes. It’s just because of piling up exceptions. I’d bet 80 % of any income tax declarations is wrong in one way or the other.

    This Politicians deserve their self made laws

  7. The Killefer thing seemed a bit much; at that scale, for that sort of thing, no matter who you are, you pay an extra fine along with the owed taxes and get on with life. It’s a minor offense punished with a minor fine. That’s not a double standard for the haves and the have-nots so long as you properly atoned for your misdeeds. (Politically, however, given the effort that had to be put into confirming Geithner, this was likely necessary to avoid expending even further political capital over a relatively minor appointment.)

    Daschle and Geithner, on the other hand, committed markedly larger offenses in dollar terms. Far more important than that to me, however, is that from what I understand, each not only committed an error but, when notified of the error, did not promptly attend to its correction. As the saying goes, an error doesn’t become a mistake unless you refuse to correct it. They each refused to correct their errors (Daschle less so if you believe him that he thought his accountant was taking care of it, but for six months without verifying that fact? seems rather long), and I think each would have deserved not to be confirmed.

    All this said, if the Democrats were to push for a flat tax to simplify the taxation process for their own politicians, I guarantee you it would receive as great a show of bipartisan support as can be imagined for any substantial piece of legislation, and perhaps there might be no more Geithner, Daschle, or Killefer snafus.

  8. I’d rather ask how broken are tax systems, that require professional accountants for doing proper and legal tax declarations. Especially if you consider that the tax office has to put similar effort into verifying your tax declarations.

    What a huge waste of money.

  9. Well while I am sure the US tax system can be simplified I think just stating that if you need help to deal with it means its to complex is a bit overly simplistic. These people have very complex income situations with a wide range of sources providing them with a very wide range of payouts and benefits, with the money coming both from national and international sources. This is a very different setup from Joe average who for the most part have one source of income and a fixed set of benefits from a national source.

  10. Mathias Hasselmann: “What a huge waste of money.”

    This is exactly the right way to look at it. Every tax code has a cost of implementation, and our cost is extraordinary. In other words, tax code reform is an opportunity to shrink the government.

    That’s the good news. The bad news is it’s insane for political reasons. The US government has been in and out of gridlock for the last almost 30 years. It won’t improve until there’s a really dominant party in power. We haven’t quite reached that point yet, I don’t think.

  11. I think our tax system is too complicated. The first time I filed taxes in college I was so frustrated I almost cried. And believe me, at the time my taxes were pretty straight-forward! Without tax preparation software (a huge business) even the simplest of tax filings can take hours and cause lots of headaches.

    Anyways, what I wanted to say is that an accountant doesn’t keep you from making these “mistakes”. All you have to do is not mention facts to them and they can happily sign off on what you gave them.

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