The Taxman

John McQuaid writes:

Obviously, whether you are in public service or not, you ought to know the basics of paying taxes and … pay them. But if you’re in the vanguard of “change we can believe in,” there’s no excuse for such carelessness. One reason for these forehead-slapping errors may be the strange relationship most of us have with federal income taxes. For the most part, taxes are something we think about as little as possible. Once a year, we are forced to make an unpleasant reckoning with how much we make, how much we spend and save, and how much goes to various governments. Often at this juncture, a willful ignorance imposes itself, especially when it comes to taxes that aren’t automatically withheld. Do I really have to pay this or this, on top of everything I’m already paying? Perhaps, if I don’t pay it, it will just go away! And you know, most of the time it does go away. Odds are the IRS won’t find out. Until, of course, the president needs your services.

This is a childish and borderline-dishonest way to conduct your affairs, and it’s fascinating that a bunch of earnest Democrats seem particularly prone to it.

I’m agnostic as to whether President Obama’s nominees were dishonest, irresponsible, both, or neither. I’ve neither reached their professional heights nor made anything close to the salaries they enjoy. But I can certainly imagine myself unknowingly making the very errors that they made.

Imagine, for example, that a new job forced me to commute from my house in Washington DC to an office in Northern Virginia. One night, my boss mentions that his driver lives nearby my house.

“I’d be happy to have my car drive you here in the morning,” he says. “It’s no difference to me, and you could save some money on the metro.”

Prior to this week, I’d have said, “That’s awesome — thanks so much.” But apparently the right answer is, “No thanks, I’d love the ride, but owing hundreds of thousands of dollars of taxes on your gift would ruin my life!”

Or are my circumstances different in a way that would enable me to accept the rides without owing so much? I cannot figure it out. I’ve spent an hour on Google, scoured the IRS Web site, and G-chatted my most financially savvy friends. Still no conclusion, or even an educated guess, and surely I am better positioned to investigate the matter than most Americans. Obviously I could call an accountant, who could explain things to me, but given this example I’d never have thought to ask.

Nor can I easily determine, for example, whether I ought to pay some sort of tax if I hire someone to help me move boxes for a couple days, or pay a friend to design a Web site for me, or whatever. I’ve made a good faith effort to pay what I owe in taxes over my working life, but I haven’t any confidence that my returns have been perfect, and I couldn’t tell you whether I’m richer or poorer for any mistake.

Why don’t I invest some time and figure out the tax system, so that over the next ten years I have a higher degree of confidence that my returns are perfectly accurate? My guess is that I could as easily learn Chinese, a language that at least changes less often! I haven’t got that kind of time, nor should any just government demand that I invest it merely to pay my taxes correctly. Nor are tax laws the only ones so numerous and complicated that no citizen can understand them. Is that childish? Perhaps, but if so it is overly complicated laws that have rendered me as helpless as a child to figure them out.

Tom Daschle is sufficiently wealthy that he could have paid an accountant expert enough to avoid his mistakes. I imagine that is what the well-connected, ultra wealthy DC elite are going to do going forward, especially if they anticipate serving in government.

I can’t say I mind that they’re all more likely to pay what they owe. But what about people less wealthy, or who don’t gear their whole adult life to serving in government? Is scrutiny of past taxes going to dissuade everyone but insiders from going through the confirmation process?

I hope not. I don’t plan on making a career in government, but on the off chance that the charismatic James Polous rises to the presidency as head of the new PomoCon Party, I’d like to preserve my chances of becoming ambassador to Spain.