(2009-02-03) Obama Cabinet Tax Issues

Tim Geithner was confirmed as Barack Obama's Treasury Secretary despite having failed to pay $35k in Income Tax-es. (The IMF pays its half of Social Security taxes to its employees, expecting them to pay the IRS themselves.) The Washington Post quoted a tax expert who said that Turbo Tax has not been programmed to handle self-employment taxes when the user identifies himself as being employed. (I've run into weird issues with handling those things myself in the past, but I did so.)

Tom Daschle was supposed to become Secretary of Health And Human Services, but withdrew after it was found he owed $140k in taxes. Mr. Daschle, a closer confidant to Mr. Obama than any other cabinet nominee, had offered to step down over the weekend, but officials close to both men said Mr. Obama had urged him to fight for confirmation. On Monday, Barack Obama said he "absolutely" stood behind Daschle.

Nancy Killefer was supposed to become the first Chief Performance Officer, but withdrew after it came out that Washington DC had filed a lien on her house for failing to pay state UnEmployment on her household staff. Killefer and her husband, an economics professor, had a teenage son and daughter, but she had two nannies and a personal assistant to run her life when she was on the road. Two nannies when she has teenagers?

Don't these people get vetted?

The developments distracted attention from Mr. Obama's effort to push his Economic Stimulus plan through the Senate and complicated the initiative that Mr. Daschle was to have led, his plan for overhauling the HealthCare system. The nominees' tax problems also gave Republicans a new argument against Mr. Obama and his party as the economic debate proceeds: that Democrats are cavalier about taxing other people because they do not abide by the tax laws themselves.

In a broadcast interview Tuesday night, Mr. Obama admitted to mistakes in handling the Daschle matter. "I'm here on television saying I screwed up and that's part of the era of responsibility," he told NBC News. "Ultimately it's important for this administration to send a message that there aren't two sets of rules. You know, one for prominent people and one for ordinary folks who have to pay their taxes."... Press secretary RobertGibbs portrayed the withdrawals of Mr. Daschle and Ms. Killefer as efforts to uphold the president's standard of accountability. "I think they both recognized that you can't set an example of responsibility, but accept a different standard in who serves," he said. Hrmm, or is it a pattern of trying to allow 2 sets of rules until the news gets too hot - see lobbying rules [z2009-01-22-ObamaFirstExecOrders].

Should he use this as a chance to pitch a Flat Tax model?