Tax Lawyer's Blog

Timothy Geithner isn’t the first Presidential cabinet nominee to have a “nannygate’ problem.

Listen to this from AOL News’ Political Machine:

President Clinton’s first two nominees to serve as Attorney General were felled by irregularities with their domestic help.  Zoe Baird, the first of the two, had hired an illegal immigrant as a nanny and neglected to pay Social Security taxes on the nanny’s salary. Incredibly, after Baird was forced to withdraw, Clinton nominated Kimba Wood, who was found to have nearly the exact same problem.

Eight years later, President George W. Bush’s nominee to head up the Labor Department, Linda Chavez, withdrew her name when it became known that she had allowed an illegal immigrant to live in her home and had paid her to perform odd jobs. In his second term, Bernard Kerik, President Bush’s nominee to be Secretary of Homeland Security, withdrew after his nanny problems became public.

Kerik was later found to have more pressing legal concerns, but it was the nanny problems that forced him out.

All four of these individuals were summarily disqualified because they failed to pay employment taxes on their domestic help.

Then comes Geithner.

Based on the evidence, it seems his case is more egregious than the other three cases combined.

First, Mr. Geithner’s nanny problem is not his only tax transgression. He also incorrectly treated income he had received while a U.S. based employee of the International Monetary Fund (IMF) as excludable foreign earned income.

Geithner admitted to making an unexplained, “common tax mistake,” from 2001-2004 while working for the International Monetary Fund. Geithner has since paid all back taxes owed, but he did not admit the error or pay the taxes until after his nomination by President-elect Obama.

Second, Mr. Geithner is Obama’s choice to be the nation’s top financial man. As Secretary of the Treasury he will be the boss of the Commissioner of Internal Revenue. 

Shouldn’t Mr. Geithner, then, be held to a higher standard of conduct when it comes to tax compliance than the standards applied to Baird, Wood, Chavez and Kerik?

Finally, with regard to the nanny problem, Mr. Geithner was audited in a prior year and told that he was required to treat his domestic worker as an employee and continued to fail to do so in subsequent years.

But in spite of all this, it doesn’t seem Republicans intend to make much of Geithner’s tax faux pas.

Listen to these comments from GOP Senators:

Still, GOP Sen. Orrin G. Hatchof Utah called the tax problems “a mistake that a human being can make” and cautioned fellow Republicans to “think this through” before digging in against Geithner. “They’re not going to get anybody better than him from this administration for treasury secretary,” he said.

And John Ensign, R-Nev., who said he spoke with Geithner for about a half-hour on Wednesday, said he didn’t foresee trouble for the nominee. “It’s very, very easy to make honest mistakes,” he said.

Pat Roberts, R-Kan., said he probably would vote to confirm Geithner.

Compare that to this comment made by a Democrat about Sarah Palin’s alleged failure to include on her tax return per diems paid to her by the State of Alaska (they were not included on her W-2) and her acceptance of those per diems while she worked from home:

The last governor from Southcentral Alaska was Tony Knowles, who said he leased out his Anchorage home while in office.

“When you’re living at home, you don’t pay yourself for living at home,” Knowles, a Democrat, said in an interview Tuesday. “And if you use a technicality to get around that rule so you can get paid for it, it’s not right.”

I guess there is no break for a Republican with an “honest mistake.”

So, in the name of all you liberal egalitarians out there, I think it’s only fitting and proper that we treat Mr. Geithner in the same way we treated Zoe Baird, Kimba Wood, Linda Chavez and Bernie Kerik.

Mr. Obama, withdraw Mr. Geithner’s nomination forthwith.

P.S. At press time Charlie Rangel was still Chairman of the House Ways and Means Committee.

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