by Deb Cupples | Earlier today, I blogged about the Richest 400 American taxpayers, whose average income doubled during President Bush's first six years -- while their tax rates went down by one-third.
Naturally, my eyes widened as I later happened upon an article about the apparent tax-dodging of former U.S. Senator Tom Daschel (D), whom President Obama has nominated as Secretary of Health and Human Services.
The New York Times reports:
"President Obama’s pick for health and human services secretary, Tom Daschle, failed to pay more than $128,000 in taxes, partly for free use of a car and driver that had been provided to him by a prominent businessman and Democratic fund-raiser, administration officials said Friday.
"Mr. Daschle, concluding that he owed the taxes, filed amended returns and paid more than $140,000 in back taxes and interest on Jan. 2, the officials said....
"The committee report said Mr. Daschle had told the committee staff that 'in June 2008, something made him think that the car service might be taxable, and he disclosed the arrangement to his accountant.'” (NYT)
If Mr. Daschel were an ordinary American who'd had been doing his own taxes, I might understand such a "mistake" three years in a row.
But Mr. Daschle is not a mere ordinary American. He served in Congress from 1978 through 2004 (elected to the House in 1978 and to the Senate in 1986). He served on the Senate Finance Committee, which has jurisdiction over the Internal Revenue Service.
True, being on the Senate Finance Committee doesn't signal expertise in tax law -- or in anything else for that matter. Still, it doesn't require such expertise for someone to know that when he receives something valuable for free (like costly car-and-driver services), the IRS might want to know about it.
The few tax accountants I've consulted have been pretty careful about giving me odd examples and broad categories of things might qualify as reportable income. Good accountants do that sort of thing.
I simply cannot understand why it did not occur to Mr. Daschle to at least bring up the costly car-and-driver services during a consultation with his accountant -- until after Mr. Daschle's pick for president won the primary and it looked like Mr. Daschle had a shot at becoming a cabinet member.
Admittedly, questionable timing is not proof of intentional wrong doing, but another issue bothers me: ABC News tells us "Mr. Daschle also didn't report $83,333 in consulting income in 2007."
The New York Times states:
"Under his consulting arrangement with InterMedia, the report said, Mr. Daschle received $1 million a year, or $83,333 a month. The payment to Mr. Daschle for May 2007 was omitted from the annual statement of income sent to him by InterMedia. Ms. Backus said the omission resulted from 'a clerical error by InterMedia.'”
Surely, Mr. Daschel was aware that he should have been paid $1 million by Intermedia, given that he'd agreed to the deal. I find it hard to believe that -- when looking at his W-2 or 1099 form -- he failed to notice that his income from InterMedia was shy of the million-dollar mark.
This reminds me of now-Treasury Secretary Timothy Geithner, who failed to pay about $34,000 in Social Security and Medicare taxes from 2001-04, while he worked for the International Monetary Fund (IMF). Reportedly, IMF staff had repeatedly informed Mr. Geithner that he had to pay those taxes.
Bill and Hillary Clinton made gobs of money (about $130 million) from 2000-2007, and they paid an effective tax rate of 31% of their adjusted gross income. I haven't seen an audit of the Clinton's tax records, but tax dodgers don't usually pay 31%: doing so would defeat the purpose of tax dodging.
Another thing from the New York Times article troubles me:
"Members of the committee staff from both parties have been examining a number of other issues, including his relationship with EduCap, a student loan company.
Some members of the staff have also been asking whether Mr. Daschle should have registered as a lobbyist while working at the law firm Alston & Bird, which itself was registered as a lobbyist for EduCap and for many health care companies.
On one hand, I've read that Mr. Daschle might be a good Health Secretary.
On the other hand, if the Senate keeps overlooking readily-apparent tax dodging, it'll be hard for us ordinary Americans to believe that our politicians mean it when they say "No one is above the law."
Memeorandum has commentary.
Other Buck Naked Politics Posts:
* Real Bonuses Based on Fake Profits
* Execs Made Millions While Driving Companies into Ditch
* Wealth Redistribution: Merrill CEO Spent Shareholders' Millions
* Krugman Refutes Republican Arguments for Bush-Style Corporate Tax Cuts
* House Judiciary Subpoenas Rove
* Obama & Dodd Scold Execs who Took Taxpayer-Funded Bonuses
* Krugman Asks Why Obama Not Following Through on Health Care...
* Cleaning up Political & Corporate Culture Could Help Economy
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