Obama’s recent selection of Timothy Geithner as Secretary of the Treasury is a disaster in the making. Geithner’s previous involvement in the Federal Governments decision to axe Lehman Brothers, but bailout AIG is suspicious. The bailout was poorly executed, unfair, and expensive for taxpayers and Lehman Brothers investors. The current news that Geithner also did not pay self-employment taxes for several years is only the icing on the cake.
Obama should suck it up, leave his ego at the door, and find someone untainted and exceptionally brilliant to be the Secretary of the Treasury, a position which includes oversight of the I.R.S.
Why did Obama choose Geithner? Perhaps because Geithner’s father helped Obama’s mother work on an oversees community project. According to a Wikipedia article, Geithner’s father, Peter Geithner, oversaw the Ford Foundation's microfinance programs in Indonesia developed by Obama’s mother, Ann Dunham-Soetoro during the early 1980s.
Perhaps Obama chose Geithner because he supported his campaign. Did he?
Perhaps it was Geithner’s characteristically calm demeanor in the face of crisis or his long resume. I’ve been in the business world long enough to see incompetents calmly land positions of authority simply because of their swagger. Look at George W. Bush as the perfect example. Sometimes it’s not what you know, it’s who you know. Connections plus infinitesimal self-confidence equals a big promotion.
DISHONESTY OR IGNORANCE?
Geithner himself failed to pay his own self-employment taxes for several years. A New York Times article dated January 14, 2009, reports that Geithner admitted he recently paid $48,268 in total unpaid taxes and fines. The Obama administration calls this an “honest” mistake. What’s “honest” about it?
Since Geithner was hired as an independent contractor, his employer would have been required to submit a 1099 form to him, clearly marking “non-employee compensation” in box 7. Geithner would have understood that he needed to report this. It would not have taken the I.R.S. long to catch up with Geithner since his employer would have submitted a copy of the 1099 to them as well.
Geithner’s employer, the International Monetary Fund, said they did supply him with quarterly wage reports including information on taxes due. Since the IMF is based in Washington, D.C. and not in another country, I assume that these were proper wage earning statements as required by US Federal law.
Even if Geithner’s employer fell down on the job and did not give him a 1099, he still should have been keeping track of his personal income. If Geithner was hired as a corporation or company so that a 1099 was not required, he still should have reported this income. Sadly, the I.R.S. would not necessarily know it was not reported unless either the employer or Geithner were audited. A 2006 audit turned up unpaid taxes for 2003 and 2004. Obama’s vetting team found that Geithner owed more unpaid taxes for 2001 and 2002.
Did Geithner do his own taxes? According to the New York Times, he hired an accountant who told him he was exempt from paying self-employment taxes. Who is this accountant? Where did he go to school and get his certification? Where is he now? What’s his excuse? I want to hear from him or her.
THE ULTIMATE TAX LOOPHOLE – DON’T REPORT IT
Since Geithner was hired as an independent contractor, his employer would have been required to submit a 1099 form to him, clearly marking “non-employee compensation” in box 7. Geithner would have understood that he needed to report this. It would not have taken the I.R.S. long to catch up with Geithner since his employer would have submitted a copy of the 1099 to them as well.
Geithner’s employer, the International Monetary Fund, said they did supply him with quarterly wage reports including information on taxes due. Since the IMF is based in Washington, D.C. and not in another country, I assume that these were proper wage earning statements as required by US Federal law.
Even if Geithner’s employer fell down on the job and did not give him a 1099, he still should have been keeping track of his personal income. If Geithner was hired as a corporation or company so that a 1099 was not required, he still should have reported this income. Sadly, the I.R.S. would not necessarily know it was not reported unless either the employer or Geithner were audited. A 2006 audit turned up unpaid taxes for 2003 and 2004. Obama’s vetting team found that Geithner owed more unpaid taxes for 2001 and 2002.
Did Geithner do his own taxes? According to the New York Times, he hired an accountant who told him he was exempt from paying self-employment taxes. Who is this accountant? Where did he go to school and get his certification? Where is he now? What’s his excuse? I want to hear from him or her.
THE ULTIMATE TAX LOOPHOLE – DON’T REPORT IT
Failing to pay self-employment taxes is epidemic. According to an October 11, 2007 report from the Treasury Inspector General for Tax Administration, unreported self-employment taxes are estimated to total $39 billion. The report said the lack of this revenue is eroding our failing Social Security and Medicare programs.
Before I ever met him, my husband was employed as a contractor by the newspaper where he worked. At the time, hiring workers as contractors rather than giving them the status of employee was a good way for companies to cut costs by passing the extra tax burden on to their employees. This means that when you file your taxes, you basically pay double the social security and medicare tax that you would pay as an “official” employee, or 15.3% instead of 7.65%.
Hiring workers as contractors for regular hours over long periods of time is now illegal in most states, primarily because unions have interceded, fighting on behalf of the workers for the right to be an “employee,” a protected status. Only employees can collect unemployment benefits. Contractors cannot. Only employees can collect insurance disability from their employer if they are injured on the job. Contractors cannot.
Being hired as a contractor also gives employees a false sense of income. You might think you’re getting a good wage at $25 per hour from one company while another offers you only $24 per hour, but will deduct taxes. In the end, the job paying $25 actually pays only $23 per hour after you pay the extra self-employment taxes.
Like Geithner, my future husband also did not pay his self-employment taxes. He paid for it later in stiff fines, about forty percent over what he owed when the IRS caught up with him a few years after the taxes were due. My future husband says he was clueless that he had to pay these taxes and didn’t receive 1099s. But, my husband is a journalist, not an accountant and I can testify that he is horrible with math. He is also not the president of the Federal Reserve Bank of New York or a contracted employer for the IMF, a company involved in the surveillance and “monitoring of economic and financial developments,” according to their website.
Geithner is.
Either Geithner is ignorant of tax law or dishonest. Either reason should disqualify him from our country’s highest position of tax authority.
Before I ever met him, my husband was employed as a contractor by the newspaper where he worked. At the time, hiring workers as contractors rather than giving them the status of employee was a good way for companies to cut costs by passing the extra tax burden on to their employees. This means that when you file your taxes, you basically pay double the social security and medicare tax that you would pay as an “official” employee, or 15.3% instead of 7.65%.
Hiring workers as contractors for regular hours over long periods of time is now illegal in most states, primarily because unions have interceded, fighting on behalf of the workers for the right to be an “employee,” a protected status. Only employees can collect unemployment benefits. Contractors cannot. Only employees can collect insurance disability from their employer if they are injured on the job. Contractors cannot.
Being hired as a contractor also gives employees a false sense of income. You might think you’re getting a good wage at $25 per hour from one company while another offers you only $24 per hour, but will deduct taxes. In the end, the job paying $25 actually pays only $23 per hour after you pay the extra self-employment taxes.
Like Geithner, my future husband also did not pay his self-employment taxes. He paid for it later in stiff fines, about forty percent over what he owed when the IRS caught up with him a few years after the taxes were due. My future husband says he was clueless that he had to pay these taxes and didn’t receive 1099s. But, my husband is a journalist, not an accountant and I can testify that he is horrible with math. He is also not the president of the Federal Reserve Bank of New York or a contracted employer for the IMF, a company involved in the surveillance and “monitoring of economic and financial developments,” according to their website.
Geithner is.
Either Geithner is ignorant of tax law or dishonest. Either reason should disqualify him from our country’s highest position of tax authority.
