Pulitzer Prize Winners: Geithner Far Worse Tax Evader Than Daschle

February 8th, 2009 5:18 PM

Former Sen. Tom Daschle might have been forced to withdraw his name as President Obama's Health and Human Services secretary last week, but his tax problems were far less egregious than Timothy Geithner's, the man just confirmed as the Secretary of the Treasury.

In fact, according to Pulitzer Prize winning Vanity Fair contributing editors James Steele and Donald Barlett, Geithner's offenses were significantly worse because he "not only signed a paper acknowledging he owed taxes, he collected money to pay the taxes and then didn’t."

The pair were interviewed by Democracy Now's Amy Goodman Friday, and told their liberal host things about this matter few in the media would dare as it would be another embarrassment for Obama (video embedded below the fold with rush transcript):

AMY GOODMAN, HOST: President Obama continues to be plagued by the tax problems of several of his nominees to top posts in his administration. Republicans have seized on the issue as an attack line against the Democrats. Representative Eric Cantor of Virginia, the House Republican whip, recently told a party retreat, "It's easy for the other side to advocate for higher taxes. Because you know what? They don't pay them."

The series of nominees with tax problems started with Timothy Geithner. As Treasury secretary, he now oversees the collection of taxes, but he failed to pay $34,000 in taxes until he received the offer of a cabinet job. Then there was Tom Daschle, nominated for secretary of Health and Human Services, even though he neglected to pay $128,000 in taxes until he was nominated. And there was Nancy Killefer, chosen to be the White House chief performance officer. She failed to pay unemployment taxes for a household employee.

Daschle and Killefer withdrew their names from consideration Tuesday after a firestorm in the media and on Capitol Hill. Geithner, on the other hand, was confirmed by the Senate last week.

This is what he told the Senate Treasury Committee at his confirmation hearing.

TIMOTHY GEITHNER: Senators, before I finish, I want to address directly the concerns many of you have raised about the mistakes I made in preparing my tax returns. These were careless mistakes. They were avoidable mistakes. But they were unintentional. I should have been more careful. I have gone back and corrected these errors and paid what I owed. I want to apologize to the committee for putting you in the position of having to spend so much time on these issues when there is so much pressing business before the country.

AMY GOODMAN: Despite the fact that Geithner sailed through the confirmation process, while Daschle went up in flames, Geithner's tax troubles were actually far more egregious. Well, at least that's the argument my two next guests put forth in their latest article.

Don Barlett and Jim Steele are contributing editors at Vanity Fair who have been writing about taxes for nearly four decades. They have won virtually every major national journalism award, including two Pulitzer Prizes, two National Magazine Awards. Their latest article appears in thedailybeast.com. It's called "Why Geithner Was Worse than Daschle." They are the authors of seven books, including The Great American Tax Dodge: How Spiraling Fraud and Avoidance Are Killing Fairness, Destroying the Income Tax, and Costing You. Don Barlett and Jim Steele join us in Philadelphia.

Welcome to Democracy Now!

JAMES STEELE: Good to be with you, Amy.

AMY GOODMAN: It's good to have you both with us. Jim Steele, let's begin with you. Why do you think Geithner's problems were actually worse than Tom Daschle's tax problems?

JAMES STEELE: Well, Daschle ended up having to pay far more in taxes than Geithner did, and neither one of these cases are forgivable or can be explained away easily. But the difference with Geithner is, I think almost every American knows that you have to pay Social Security and Medicare taxes. I think just the average person on the street who draws a paycheck knows that is taken out of their check. And that's what's so disturbing about Geithner's. If these were avoidable mistakes, if these were simply things he overlooked, I think the question is, why weren't those corrected at some point before President Obama had tapped him to be Treasury secretary?

This is the thing that's actually disturbing about both of these cases. Both Geithner and Daschle went back and paid these taxes, but only after their names were dropped into that hopper, which suggested they were going to be cabinet officers. If these were truly under those categories of those kinds of mistakes, the question is, why wasn't that done at some time in the past, especially in the case of Geithner, where he had been audited by the IRS for previous tax years and had paid some additional taxes at that time. It was only after he was suggested for the Treasury secretary and the vetting process began that he then remitted these additional taxes.

AMY GOODMAN: Don Barlett, explain further exactly what the taxes were that Tim Geithner paid and didn't pay and what the relation was to his work at the IMF, the International Monetary Fund.

DONALD BARLETT: Well, as Jim indicated, these are the payroll taxes-Social Security, Medicare-that everyone has to pay. And, you know, the tax code is complex. Everybody knows that. It is easy to make a mistake.

But the reason we said that Geithner's was far more egregious is this. He signed a piece of paper acknowledging that he owed both taxes while he was employed by the IMF. He then collected the money from IMF to pay the taxes. Now, most of us, you know, the payroll taxes are withheld. We don't get reimbursed for those taxes. It comes out of our own pocket. But Mr. Geithner not only signed a paper acknowledging he owed taxes, he collected money to pay the taxes and then didn't pay them and pocketed the money. This is why it was far more egregious for him and why-you know, the New York Times demanded that Tom Daschle withdraw, and he did. But the same demand was not put on Mr. Geithner.

And even more disturbing is the fact that only one Democratic member of the Senate Finance Committee voted against Mr. Geithner for this reason-for this reason. That was the Iowa Senator Tom Harkin, who said he just couldn't support it. And Harkin was right, because the message this is sending to the public of large-the tax system already is as close to collapse as you're going to get as a result of it not being enforced evenly. The double standard on tax law-as you indicated in the introduction, Jim and I have been writing about taxes for almost forty years. Our first series that won the Pulitzer Prize was on the unequal enforcement of the tax code. And that was back in the 1970s. And since then, it has exploded. And what is happening now in Washington just captures where it is now. Here you have the Senate Finance Committee approving this, and you have the Senate overwhelmingly approving it.

AMY GOODMAN: I just want to go back to that one point that you made about Geithner and what you wrote about in this piece in The Daily Beast. "According to the Senate Finance Committee, Geithner ‘filled out, signed and submitted an annual tax-allowance request with the IMF that states, "I wish to apply for tax allowance of US federal and state income taxes and the difference between the ‘self-employed' and ‘employed' obligation of the US Social Security tax which I will pay on my Fund income."'"

So the IMF actually gave him money for those taxes to pay, but he didn't pay them. When exactly did this come to his attention? And why is it now that he's paying them, Don?

DONALD BARLETT: Well, he wanted to be secretary of the Treasury. I mean, you want a top cabinet job, you've got to pay your taxes. I mean, it looks a little unseemly if you don't.

AMY GOODMAN: Right, it's clear why he's paying them now, but how long was it? I mean, it was called to his attention before this point.



JAMES STEELE: Two audits for a couple of those previous years. And he did have a settlement with them at that time. But it was not until his name was proposed for Treasury secretary that then the vetting-in that vetting process, he went back and looked at two other years, if I'm not mistaken, and it was on those, where the situation was very similar to the ones he had settled with IRS, that he then paid the taxes.

Fascinating, yes? And yet this man was confirmed with very little objection.

Would that have been the case if the press had done a better job explaining what Geithner's real tax evasion was?

Those interested in the pair's Daily Beast piece should go here.