American Elephants

Taxing Matters! by The Elephant's Child

Nobody likes paying taxes.  Many, who have their taxes withheld at work, are more or less unaware of paying taxes and appreciative of the size of their refund, thinking of it as a sort of gift rather than an overpayment of the amount actually due.   Folks who are their own bosses suffer through paying quarterly taxes, and are very conscious of how much they pay.  “Withholding” was designed to make paying taxes less noticeable and therefore more pleasant.  It apparently works, for the taxes most resented in all cases are those taxes of which one is most aware.

Our relationship with the collectors of taxes is therefore complicated.  Some live in terror of the IRS, possibly because of the extra charitable donation they claimed.  But the collectors only collect.  Our argument should be with those who raise our taxes so casually.  That’s those folks in the House of Representatives whose ideas of “fairness” are so very, very strange.

Which brings us to the Chairman of the House Ways and Means Committee, Charles Rangel, who is in trouble with the Ethics committee for, among other things, not paying his taxes.

And we have the case of Timothy Geithner.  Timothy Geithner is Obama’s Treasury Secretary-designate.  He was most recently President of the New York Federal Reserve, and before that he was at the International Monetary Fund.

The IMF does not withhold state and federal income taxes or self-employment taxes — Social Security and Medicare — from its employees’ paychecks.  Because this might be confusing, the IMF goes to great lengths to explain to their employees just what their tax liabilities are.  Each employee receives a IMF Employee Tax Manual.  For the purpose of calculating their quarterly tax returns, each employee receives a quarterly wage statement.  Then, there are year-end wage statements.  Each employee is required to file for an Annual Tax Allowance Request.

Although employees are expected to pay their taxes out of their own money, they receive an allowance to cover those tax payments.  The employee fills out a form with their basic information — marital status, dependent children and so forth, and the IMF estimates the taxes due and gives the employee a corresponding allowance.   At the end of the form are the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.”

Geithner signed the form.  He received all the paperwork and the allowance.  He just did not pay the social security and medicare taxes from 2001,2002,2003 and 2004.  In a 2006 audit the IRS discovered that he had not paid in 2003 and 2004.  He was assessed $17,230 including interest. which he paid.  The Obama transition team uncovered the fact that he had failed to pay in 2001  and 2003, at which point he dredged up another $25,970.  There was also an additional $4,334 plus interest for some other infractions.  Mr. Geithner did his own taxes.

The Obama administration said that it was “a common mistake.”

Charlie Rangel neglected to pay taxes on the rental income from some houses he owns in the Dominican Republic.

Does this matter?  Mr. Geithner is an important economist who, as Secretary of the Treasury, would be in charge of the IRS, as well as the complications of the economic recovery.  Mr. Rangel is the most influential person in Congress related to taxing and spending.

Is this a big deal?  Or just a common error like most people make at one time or another?    Ordinary hypocrisy?  Something embarrassing to be overlooked?  Cause for dismissal?  It does matter, doesn’t it?

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