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LAMBRO: Tax dodge depot
Question of the Day
It’s a safe bet President Barack Obama will not be getting any awards from H&R Block for his administration’s ability to sniff out tax dodgers among his Cabinet nominees.
Three nominees in a row, at last count, have run into trouble for nonpayment of taxes. One wiggled through his nomination, but two others have withdrawn, badly tarnishing the Obama presidency and shaking public confidence in his administration.
It was embarrassing enough that Timothy Geithner, Mr. Obama’s nominee for Treasury secretary, failed to pay $34,000 in taxes. This guy, after all, was a Federal Reserve president who will oversee the Internal Revenue Service, which goes after tax deadbeats.
But worse than that, Mr. Geithner had put off paying the IRS until November, shortly before Mr. Obama named him to the high-level Cabinet post, two years after the IRS brought the troubling tax problems to his attention in 2006.
When the roll was called in the Senate on his nomination, 34 senators voted against confirmation - an unusually high vote of no confidence for a Treasury secretary - including Democratic Sen. Tom Harkin of Iowa.
Before that scandal had barely cooled, former Senate Majority Leader Tom Daschle, nominated to be secretary of the Department of Health and Human Services, revealed he hadn’t paid more than $128,000 in back taxes over three years. Incredibly, Mr. Daschle chose to pay what he owed (more than $140,000 with penalties) just six days before his confirmation hearing. Colleagues were stunned by his lame excuse that he didn’t know he owed the taxes.
The Senate Finance Committee, which oversees the IRS and the tax code, questioned Mr. Daschle behind closed doors Monday to hear their former colleague’s explanations for his transgressions. He emerged from the grilling looking ashen-faced. By Tuesday, he withdrew his nomination, saying the uproar of his tax delinquency would only be “a distraction” that would end up hurting a presidency still in its infancy.
Ignorance of the law is no excuse when the average American worker is hauled before the IRS court to explain nonpayment of taxes. But that was part of Mr. Daschle’s explanation when he was asked why he did not pay the taxes that were long overdue.
He had made more than $5 million in the last two years, reaping more than $220,000 from the health-care industry he would oversee as HHS secretary and the use of a chauffeured limo whose services are taxed by the IRS as income - but on which he had paid no taxes. That service alone was valued at $255,000 in unreported income, the committee’s staff investigation found. Failure to report it can be a crime.
Particularly embarrassing to the Obama White House were the huge sums Mr. Daschle raked in from the health industry over which he would have official jurisdiction as HHS secretary.
The Health Industry Distributors Association dished out $14,000 for a speech he gave last year, and reminded him of the fat check he got from them when they raised concerns about possible Medicare reforms that would affect their industry.
In a letter, posted on their Web site, the organization reminded Mr. Daschle: “As you may recall from speaking to some of our members during HIDA’s 2008 Executive Conference in Miami, where you were the keynote speaker, a competitive bidding program will undermine access to quality care for millions of beneficiaries.”
But the consulting (i.e. lobbying) Mr. Daschle did for the health-care industry goes much deeper than the big speaking fees he got from the health insurance industry, drug companies and other health-care groups.
As part of his work for law firm Alston & Bird in the last two years, he gave “policy advice” to United Health, an insurance conglomerate that assists the Medicaid program and dispenses advice to drug companies.
About the Author
By Matt Kibbe
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