January 16, 2009
Why Geithner and Rangel MatterBy C. Edmund Wright
The Chairman of the House Ways and Means Committee and the U.S. Treasury Secretary are literally the two highest ranking political figures with regard to the Internal Revenue Service. If any two people on the planet should set an example in their tax behavior, it is the two people who hold those positions and anyone who aspires to them.
Inspired by their recent behavior, I left a question on my corporate accountant's voice mail today. "Jim, I just want to know if I can simply pay taxes just the way the Chairman of the House Ways and Means Committee OR the incoming Secretary of the Treausurer pay them?"
He laughed, and replied "of course... as long as you don't mind doing some time." Well, this explains why we go to great pains to make sure our company is in compliance while preserving as much of our business capital as possible each and every year
Charles Rangel and Timothy Geithner are apparently somewhat more casual about tax compliance, taking hypocrisy and irony to new levels in the process.
As the Chair of the House Ways and Means Committee, Rangel is literally the most influential member of Congress related to taxing and spending. As we found out in September, Rangel decided that he was above paying taxes on rental income on some houses he owned in the Dominican Republic
And as we found out days ago, the man appointed by Barack Obama to run the Treasury Department -- of which the IRS is a major part -- has also considered himself above the tax laws that haunt the rest of us.
Please understand these two people will have tremendous influence on how our tax laws are written and that they will expect every damned one of us to follow that 66 thousand page tax code to the letter. Or as Joe Biden would say, they expect us to "be patriotic" and to do so accurately.
Which makes the excuses rendered by Rangel jaw dropping. These are exuses I would not recommend you try at home. Look at some of the explanation from Rangel and his attorney Lanny Davis (along with some comments.)
Yeah, right. Let you or me try to claim the ignorant wife and accountant as a defense to the IRS.
Well yes, it should. It is called "taxable income," an understanding that should not escape the man who wants to dictate tax policy for the rest of us.
I am sure that will go a long way with IRS agents. By the way, just how low is your bar for "morally wrong."
Geithner, meanwhile, has few public comments on his issue to date, perhaps because one of his two problems is inexcusable and any comment will simply make the PR problem worse. While working for the International Monetary Fund, Geithner failed to pay taxes even though the IMF "grossed up" his pay to actually give him the money with which to pay his taxes. They also attached a stub that showed exactly what his pay was including how much had been grossed up (let me help you Obama voters or potential cabinet members: this means it showed exactly what taxes he owed on that particular income.) I mean, this was not complicated.
Not only that, but Geithner himself prepared his own tax returns for several of the years where this underpayment was made. Bottom line: He either is not capable of handling a rather pedestrian income statement for tax purposes or he flat out cheated. Frankly, I am not sure that either explanation gives me the utmost confidence in the "only man smart enough to understand the TARP" program. Based on his tax return, how can we be sure he even understands the business impact of "depreciation recapture" let alone "credit default swap."
Then again, he was appointed by the man who lost an impromptu debate on basic tax policy to a plumber from Ohio, clearly demonstrating an ignorance of what a capital gains tax is in the process.
Charlie Rangel. Tim Geithner. Barney "Fannie Mae" Frank. Chris "Countrywide" Dodds. Rahm Emanuel. And Barack Obama. And so on.
We have been told that these are the people who are going to lead our economy out of the Bush imposed wilderness and to the Promised Land. These are the people who will end the Republican's "culture of corruption" and "era of special interests" in Washington and clean things up. These people represent hope and change.
I think we can look at this and easily understand why the stock market is tanking. We can figure out how, for the second month in a row, the jobless report "stunned the experts." Investors and business owners do not live in the make believe world of Washington and its political gamesmanship. These people have skin in the game. These people suffer when they make bad decisions, and they are en masse deciding that to "take their ball and go home" as the only prudent decision. That's why people are dumping stocks and laying off employees.
When the people who make the rules are either too ignorant to understand their own rules or feel entitled to break them, the allure of playing is simply gone for the rest of us. Apparently, more than half the voters have no understanding of this concept. And no amount of bail-outs will change that.