It Was An “Honest Mistake”

by McQ | January 15, 2009 7:15 pm

I got a bit nauseated yesterday listening to all the talking heads tell us over and over the obvious talking point that Timothy Geithner made an “honest mistake”.

Really? How honest of a mistake is it when you knowingly ignore[1] something your employer went out of its way to ensure you knew?

The IMF did not withhold state and federal income taxes or self-employment taxes — Social Security and Medicare — from its employees’ paychecks. But the IMF took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. First, each employee was given the IMF Employee Tax Manual. Then, employees were given quarterly wage statements for the specific purpose of calculating taxes. Then, they were given year-end wage statements. And then, each IMF employee was required to file what was known as an Annual Tax Allowance Request. Geithner received all those documents.

As usual, I and our politicians have a different view of what constitutes “honest”.

Secondly, the non-payment was discovered in 2006. The story is that Geithner “promptly paid” the taxes and fine when discovered. In reality he paid it the day before he was nominated to the Treasury position. Again those pesky facts defeat the talking points.

Last, how about outright fraud? Geithner was paid an allowance by the IMF as restitution for the taxes he paid. Yeah, nice gig if you can get it. But again, he never paid the taxes, so why did he accept the allowance?

The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.

At the end of the tax allowance form were 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 accepted the allowance payment. He didn’t pay the tax. For several years in a row.

No kidding. But that’s just a “minor hiccup”. No big deal. And of course, the idiots on the right[2] are just as willing to overlook this as those on the left:

Sen. Orrin G. Hatch (Utah), the second-most senior Republican on the Senate Finance Committee, which is charged with reviewing Geithner’s nomination, called him “brilliant” and “honest” and said that, despite his tax errors, “I don’t think we can get a better person for this position. . . . He has the kind of background that should be very helpful to us at this time.”

Sen. Robert F. Bennett (R-Utah), a close associate of Senate Minority Leader Mitch McConnell (R-Ky.), said: “If I was a traffic officer, I’d say he may have exceeded the speed limit, but he wasn’t weaving out of lanes, he wasn’t drunk and he wasn’t endangering anybody. He may have some explaining to do, but in the end, I think he’s going to be just fine.”

These same two boobs are likely to be “shocked, shocked I tell you” at corruption in government, but when you hire crooks and frauds to sit in powerful seats in government, there should be no surprise when they act accordingly. Remember, this is the sort of thing that put Al Capone in the Big House.

Last but not least, on a less serious note, James Taranto[3] comes up with the best lines concerning Geithner:

We’re tempted to say America needs a Treasury secretary who is smart enough to figure out his own taxes. But such a cheap shot would be beneath us. Instead, we are going to make a serious point:

America needs a tax code simple enough for the Treasury secretary to figure out.

[Crossposted at QandO[4]]