Wednesday, January 14, 2009

Geithner: 1040 Good Buddy

Tim Geithner is Obama's pick for Treasury Secretary. Tim has been the President of the Federal Reserve Bank of New York since 2003. Prior to that, Tim had worked at the Treasury Department. Tim also once worked at the International Monetary Fund. Tim can't figure out his own taxes.

This is just too precious. The man who has been working side by side with Paulson and Bernanke to "save" our financial system apparently wasn't aware that you have to pay your Medicare and Social Security taxes if you work for an employer that does not. The "discrepancy" arose during his time at the I.M.F.

According the the New York Times:

The I.M.F., as an international organization, does not withhold payroll taxes for Social Security and Medicare from its American employees’ paychecks. Those workers are required to pay the roughly 15 percent tax themselves, as if they were self-employed.

However, the I.M.F. does pay its American workers an amount equal to an employer’s half of the payroll taxes, with the expectation that they will use that to pay the I.R.S. The organization also gives them quarterly wage statements that include United States tax liabilities.

Mr. Geithner fully paid his state and federal income taxes. In failing to pay his payroll taxes, he in effect kept the money the I.M.F. had contributed toward his liability. However, Mr. Geithner’s accountant told him he was exempt from self-employment taxes, according to Obama transition officials.
To be fair, I am no fan of the U.S. tax code. It is ridiculously overburdening and complicated. Hire ten different accountants to do your taxes, and you'll get ten different answers. At the same time, I'm self-employed and have to pay my own Social Security and Medicare taxes. It's not that difficult. Tim could have shelled out less than $100 on TurboTax and got this right. The I.M.F. even gave him a quarterly statement that included this tax liability! Still, Mr. Geithner and his accountant (hopefully ex-accountant) thought that he was exempt for some reason. I hope there was better rationale than, "Hey, Tim. You're rich and powerful, so you don't have to pay that. Taxes are for losers."

Does anyone remember Zoe Baird? Bill Clinton nominated her for attorney general back in 1993, but she was shot down because she hired some illegal aliens and neglected to pay their social security taxes. Tim may not have hired any illegals (though someone should verify the status of his accountant), but the situation is pretty similar. This time, however, Congress is rushing to Tim's defense and proclaiming this matter is "a lot to do about nothing." This guy is up for Treasury Secretary! The IRS falls under the purview of the Treasury Department. The guy who will likely run the whole shebang doesn't know what taxes he owes or what constitues child care (see article). Poor Zoe was born 15 years too early.

I have a strong feeling our economy would be better off in the years to come if we just turned it over to TurboTax.

The full article can be read here.

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