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Hew
02-03-2009, 10:02 AM
...and the IRS should enforce our laws to the letter,"

Tiny Tom Dashle, Congressional Record p. S4507. May 7, 1998

Geithner I can understand...a fresh face, supposedly very competent at what he does, and committed a relatively minor (in the grand scheme of things) tax faux pas. Dashole...not so much. That smarmy little SOB came to Washington without a pot to piss in and now he's a multi-millionaire K Street lobby flack; complete with a wife and son also suckling from the DC teat. I hope he's made to squirm alot and then have his nomination declined or yanked.

Even the NY Times is now calling for his head.

luvmylabs23139
02-03-2009, 11:01 AM
Geither is actually even worse IMO. SS taxes are something everyone knows you have to pay. PLus he actually got money form the IMF to pay those taxes, if that doesn't send up a clue to person that those taxes are due I don't know what does. Additionally, Geither is a financial person claiming ignorance of a basic part of the tax code.
Dashle has other issues that to me are even bigger than not knowing an obscure part of the tax code. He can't be objective in the position. He has too many ties to the drug industry to do the job in the best interests of the public.

YardleyLabs
02-03-2009, 11:10 AM
Geither is actually even worse IMO. SS taxes are something everyone knows you have to pay. PLus he actually got money form the IMF to pay those taxes, if that doesn't send up a clue to person that those taxes are due I don't know what does. Additionally, Geither is a financial person claiming ignorance of a basic part of the tax code.
Dashle has other issues that to me are even bigger than not knowing an obscure part of the tax code. He can't be objective in the position. He has too many ties to the drug industry to do the job in the best interests of the public.

Not to argue the point, but Geither was actually an unusual situation. He had been a W-2 employee his entire life and was a salaried employee at his last position. However, because of the specifics of his situation his income was treated as self employment income for purposes of paying social security taxes meaning he had to pay both the employer and employee shares. I believe he reported his income as W-2 income and only paid the employee share as a consequence. When I was a partner at Ernst & Young, this was actually one of the common mistakes made by newly promoted partners, almost all of whom were CPA's. The firm would actually send each of the new partners warnings to remind them that they needed to pay at the higher rate.

luvmylabs23139
02-03-2009, 11:32 AM
Jeff,
Any CPA should know the difference between a W-2 and a 1099. MY memory is a bit foggy as it's been years since I took the CPA exam but I think there were a ton of questions about that sort of stuff on the exam. It is accounting 101 in college, so as far as I'm concerned it was a direct attempt to avoid income taxes.
It's been a while since I practiced accounting by the basics are still drilled into my brain.

YardleyLabs
02-03-2009, 12:20 PM
Jeff,
Any CPA should know the difference between a W-2 and a 1099. MY memory is a bit foggy as it's been years since I took the CPA exam but I think there were a ton of questions about that sort of stuff on the exam. It is accounting 101 in college, so as far as I'm concerned it was a direct attempt to avoid income taxes.
It's been a while since I practiced accounting by the basics are still drilled into my brain.

You're right. The difference is that he was not a 1099 employee. He was a W-2 employee. However, the IMF as an international organization is exempt from paying the employer share of of FICA/FUTA taxes. The IRS directives state:

"Services for International Organization: Compensation for services performed within or outside the United States by an employee or officer (regardless of citizenship or residence) of an international organization is not considered to be wages for Social Security and Medicare tax purposes. For U.S. citizens the income paid for services rendered to an international organization is reportable as self-employment income on their U.S. federal income tax returns, and is subject to self-employment tax to the extent such services are performed within the United States."

The IMF warns employees of this oddity in the tax code. However, it is not something known by most tax accountants or handled correctly by most tax packages (I know this from personal experience.). If the income is entered as a salary, which it is, tax packages will calculate the employee share as the amount payable. This is what happened initially when Geither's taxes were completed by a tax accountant. Geither then filed the same way when he did his own taxes.

The complaints against him were two-fold. First, he had been warned of this issue when he started work at the IMF. Second, he was criticized because, when the IRS first found the problem during an audit he only paid the amount they requested. He did not go back and pay amounts that should have been paid for two prior years which were not addressed by the audit because they were outside the statute of limitations. After he was nominated, he went back and paid the amounts that he legally did not owe.

I am not defending his mistake. I am simply making the point that it was not as straightforward as is implied by the statement that "SS taxes are something everyone knows you have to pay." or as obvious as income reported on a 1099.

luvmylabs23139
02-03-2009, 12:33 PM
You're right. The difference is that he was not a 1099 employee. He was a W-2 employee. However, the IMF as an international organization is exempt from paying the employer share of of FICA/FUTA taxes. The IRS directives state:

"Services for International Organization: Compensation for services performed within or outside the United States by an employee or officer (regardless of citizenship or residence) of an international organization is not considered to be wages for Social Security and Medicare tax purposes. For U.S. citizens the income paid for services rendered to an international organization is reportable as self-employment income on their U.S. federal income tax returns, and is subject to self-employment tax to the extent such services are performed within the United States."

The IMF warns employees of this oddity in the tax code. However, it is not something known by most tax accountants or handled correctly by most tax packages (I know this from personal experience.). If the income is entered as a salary, which it is, tax packages will calculate the employee share as the amount payable. This is what happened initially when Geither's taxes were completed by a tax accountant. Geither then filed the same way when he did his own taxes.

The complaints against him were two-fold. First, he had been warned of this issue when he started work at the IMF. Second, he was criticized because, when the IRS first found the problem during an audit he only paid the amount they requested. He did not go back and pay amounts that should have been paid for two prior years which were not addressed by the audit because they were outside the statute of limitations. After he was nominated, he went back and paid the amounts that he legally did not owe.

I am not defending his mistake. I am simply making the point that it was not as straightforward as is implied by the statement that "SS taxes are something everyone knows you have to pay." or as obvious as income reported on a 1099.

OK, lets add that a child's summer camp is not child care expense, and he darn well should know that based on his professional credentials. That is something that any practicing accountant would be ethically bound to tell a client " NO, you can't claim that!".That naturally assumes that the accountant knows it is a summer camp expense. He attempted to avoid taxes, not that I really blame him as we all want to pay as little as possible.

YardleyLabs
02-03-2009, 01:19 PM
OK, lets add that a child's summer camp is not child care expense, and he darn well should know that based on his professional credentials. That is something that any practicing accountant would be ethically bound to tell a client " NO, you can't claim that!".That naturally assumes that the accountant knows it is a summer camp expense. He attempted to avoid taxes, not that I really blame him as we all want to pay as little as possible.

Once again, the devil's in the details. If you send your child to day camp and otherwise meet the tests for the credit, it is valid. Overnight camp would appear on the surface to meet the requirements for a child care credit except for the fact that it is specifically excluded. Logically, it's not clear to me why this is treated differently from other types of child care, but it is.

I spent a good part of my life filing my own returns for both Federal taxes and state and local income taxes in more than 50 separate jurisdictions around the United States as well as in 20 different foreign countries. On average, my return was longer than 100 pages. The amount of arcane detail and illogic in our tax codes can befuddle the most honest person. Personally, I love the simplicity of the system in Pennsylvania -- everything is income without exception. Everything is taxed at the same rate. There are no exemptions, deductions, or other tax preferences. Filing taxes takes a few minutes at most and two families with the same income always pay the same amount.

Unfortunately, every effort to simplify the Federal tax code results in even more complications being introduced as proponents of every possible special case argue for one form of favoritism or another.

K G
02-03-2009, 01:22 PM
Just heard on the radio that Daschle bailed on his nomination....now we're gettin' somewhere!!! ;-)

There's a reason he wasn't re-elected regards,

kg

Ken Newcomb
02-03-2009, 01:25 PM
Jeff;

I agree it is a potential mistake a lot of people could make, but, he is not supposed to be a lot of people. He is supposed to be THE very best person to run the IRS, thus it is a mistake he shouldn't make.

YardleyLabs
02-03-2009, 01:48 PM
Jeff;

I agree it is a potential mistake a lot of people could make, but, he is not supposed to be a lot of people. He is supposed to be THE very best person to run the IRS, thus it is a mistake he shouldn't make.

No, he's supposed to be a top economist and economic policy expert that might, if we are all lucky, be able to formulate ways to mitigate the economic disaster we are now in. In my experience, few economists are anal enough to figure out taxes. For that you need an accountant who knows nothing about the economy and doesn't care. The IRS and the accounting firms are full of people like that and they still can't agree on what our laws mean. We don't need that kind of person at the top of the Treasury Department. Geither is simply going to have to learn what others in the public limelight have learned before: don't even try to do it yourself.

For most of the eight years I worked in government at the beginning of my career (a long time ago) I was in enough of a political position that I never filed an expense report to claim reimbursement even for out of town travel done for my job. I was assigned a car because of the nature of my job but I refused to use it. On several occasions, I received phone calls or requests for meetings where I questioned the motives of those involved and arranged with investigators to have those calls and meetings taped. In one situation this resulted in the resignation of a top state official who, as a consequence, was forced to take a job paying five times more in the private sector.

Even with that kind of defensive mentality, I ended up facing a potential scandal at one point where, among other things, my wife's medical records were copied and sent to every newspaper, union and major elected official in the state alleging that I had abused my position to obtain subsidized care for her. An independent audit that I requested showed that we had actually overpaid by a significant amount and the story died.

The moral, if any, is that we ask a lot of our public servants and we offer them little but abuse in return. We may turn up some crooks in the process. However, what I find amazing is that any honest person would accept the job at all. When you treat everyone like a crook, you will eventually find that only the most successful crooks will put up with you; the honest people will stay home.

Hew
02-03-2009, 03:12 PM
My brother, like Geithner, worked offshore. He's no fan of Obama, but says that Geithner's mistakes are common and understandable and as he said, "it don't make him a bad guy."


The moral, if any, is that we ask a lot of our public servants and we offer them little but abuse in return. We may turn up some crooks in the process. However, what I find amazing is that any honest person would accept the job at all. When you treat everyone like a crook, you will eventually find that only the most successful crooks will put up with you; the honest people will stay home.
Exactly.

Hew
02-04-2009, 07:39 AM
This Wall Street Journal op-ed dovetails nicely with what Yardley wrote: http://online.wsj.com/article/wonder_land.html

Hopefully Cotts and all the others cheering on the Orwellian "Truth Commissions" will take a peak. Here's an excerpt:



Some may argue that a Tim Geithner or Eric Holder deserves no more quarter than the Democratic opposition has given former Justice Department official John Yoo or the other targets of the Democrats' calls for "criminal" prosecution of former government officials and CIA interrogators.

Others will say this is the normal rough and tumble of politics. It is not. It is more insidious than that. The system is on a downward spiral in which the notion that a sitting American government should be able to function is irrelevant.

Washington is falling to the level of a Web-based video game. Everyone is expendable. Treasury secretaries and presidential advisers are a dime a dozen. Put differently: The job-protected and gerrymandered lifers are driving out the competition. More often than not, Washington's worst people are destroying its better people.

In his report, Mr. Conyers cites a catalogue of good-government laws that flowed out of Richard Nixon's impeachment: the Federal Campaign Finance Act, the Foreign Intelligence Surveillance Act, the Independent Counsel Act, the Ethics in Government Act, and the Presidential Records Act.

Whatever the original rationale for such laws, the rankest impulses in politics soon turned them into weapons to take down officials in a government one can't overthrow by other means. You could fill the whole House chamber with men and women who since Watergate have been driven out and bankrupted by them. Criminalizing policy differences has become the modern version of bills of attainder.

YardleyLabs
02-04-2009, 10:21 AM
This Wall Street Journal op-ed dovetails nicely with what Yardley wrote: http://online.wsj.com/article/wonder_land.html

Hopefully Cotts and all the others cheering on the Orwellian "Truth Commissions" will take a peak. Here's an excerpt:

I think it's a good piece and should inform discussions from the right and the left. I like the analogy to video games. Maybe that has something to do with our apparent willingness to raise all disputes to a level where scorched earth tactics seem justified.

One of the things that struck me in the period of my life when i worked in government was that the ideological questions of what should we do were actually irrelevant 99% of the time. The relevant questions were could we effectively do anything to mitigate a problem. More often than not, the answer was no. At that point there were always ideologues who would fight to have something done anyway.

Too many issues get classified as measures of ideological purity or religious orthodoxy long before the science is resolved. Historically, I believe our strength as a nation has been our willingness to approach issues pragmatically rather than ideologically. A strength of our legislative system was always that people could agree on a course of action even whe they did not agree on objectives.

We seem to have lost that capacity somewhere in the mid-90's. I fear that if we do not regain a pragmatic perspective, looking for the areas that we can work together and accepting that not every problem can or should be fixed, we will continue on a path of economic and political collapse.

Gerry Clinchy
02-04-2009, 11:44 AM
The moral, if any, is that we ask a lot of our public servants and we offer them little but abuse in return. We may turn up some crooks in the process. However, what I find amazing is that any honest person would accept the job at all. When you treat everyone like a crook, you will eventually find that only the most successful crooks will put up with you; the honest people will stay home.

I don't think it is "wrong" to hold our elected officials to high standards of behavior. They are given great power to make the laws that govern the rest of us. Power should have responsibility.

Perhaps our problem has been that we are too quick to accept that our politicians will necessarily be corrupt. Corrupt politicians create the impetus for those laws that end up being used against those that aren't corrupt. And the media (as in Jeff's case) then has reason to suspect a snake under every rock.

Our elected officials are citizens and expected to obey the laws just like the rest of us. Their elected position does not absolve them from obeying the laws. Since they made those laws, they should be the first to step up to the plate in observing them conscientiously.

Jeff, I admire your efforts (while in government employ) to do the right thing. Since you were not dishonest in your behavior, you were able to document your honesty. And you deserve recognition for outing those who were dishonest and corrupt.

The media also has great power & should also be using that power responsibly. Often that is not the case.

Whatever the Obama administration turns out to be, those who are footing the bill & placed faith in the hope of change, have a right to get the facts. Thus far, regardless of the spin put on them, the appointments to high administrative positions have not been encouraging. Nor is it encouraging that some Republicans have defended that having former lobbyists in cabinet positions is "needed".