The Taxman
John McQuaid writes:
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.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.
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.
My understanding is that in Daschle’s case, he used the car service mostly for personal use, so it was several shades darker of grey than what you describe here.
— JohnMcG · Feb 4, 06:34 AM · #
So when do we audit the sitting members of Congress?
— John · Feb 4, 06:50 AM · #
I’m sorry, I can’t even begin to fathom the “innocent mistake” argument. It has nothing ot do with the complexity of the tax code. My assumption, and I think the assumption of most Americans, is this: if I get some benefit — like say my employer decides to pay off my student loans or something — I’m going to be taxed on it. If I need to pay for something for business or healthcare or whatever, I’m not going to realize a benefit. Now, if I’m clever, I can comb through the gazillion booklets from the IRS and find out how I can deduct that, or more likely find out why I should be able to deduct that but in my particular case I’m screwed. So come tax time I spend a mess of time trying to figure out if that might be the case for anything I’ve gotten, and that’s where the complexity of the code bites you. But otherwise I know I’m on the hook; unless I fill out a mess of forms to explain why I didn’t pay tax on something, I owe taxes on it. That seems to be how it works, and maybe MAYBE some Americans don’t know that, but for damn sure Tim Geithner and Tom Daschle do.
— Sanjay · Feb 4, 04:12 PM · #
Sanjay,
Or if say I were the governor of a state that had a capital in an out of the way place and most business was conducted in the largest city which happens to be near my home town, so I live at home and the state pays me a per diem for living in my house I should pay taxes on it right?
Or if say I’m said governor who has school age children and I regularly take them on business trips and the state buys their plane tickets and pays their hotel bills, I should pay taxes on that right?
I mean if I’m a governor I should know that right?
— eric k · Feb 4, 07:36 PM · #
Eric K:
Yes and no, I suppose. Or, rather, yes, but I still don’t understand why the hell the kids’ trips were paid for.
But are you arguing two wrongs make a right?
— Sanjay · Feb 4, 10:34 PM · #
No, I’m arguing that Daschle was right to step down and noting it is interesting how different the media treatment of Daschle and Palin is. Anyone who brought up the tax issue with Plain was lumped with the Andrew Sullivan Trig’s birth conspiracists. And IIRC she has yet to actually pay the taxes she owes or even admit that she did anything wrong.
— eric k · Feb 5, 01:09 AM · #
By the way, Eric, I think your examples are misaimed anyway. I work for the government, travel a lot and get per diems, and basically they’re deductible: I don’t pay taxes on that income and am not supposed to (and I actually make a nice sum on them because for whatever reason I only really eat a meal every other day or so anyway, commonly). If I were sent somewhere where I happen to have a vacation home (say), I’d still get the per diem and it’d still be nontaxable (although if I billed for lodging I’d get a well-deserved bitching out). Similarly if the state decides they have a compelling interest in sending my kids with me — which they’d better have decided if they’re paying for the kids’ damn trip, although I can’t imagine how that would happen — I’m going to deduct that too and not pay taxes for it, and justify the business expense because my employer has decided it’s justified, so no problem.
The problem with Palin wasn’t the not paying taxes. It was that neither of those things should’ve been paid for by the state in the first place (well, I’m persuadable on the per diem maybe) — once they were, I don’t think you could nail her on the taxes. It suggests that the state’s auditing was crap and that her administration was playing fast and loose with state money. But I don’t particularly think Palin was a tax cheat. Geithner and Daschle are. So I’m pretty sure she doesn’t “owe taxes.” She might owe Alaska a payback.
— Sanjay · Feb 5, 04:54 PM · #
SnaJay,
Yeah your probably right, rather than owing the IRS 30% or so of the value of what she recieved she actually owes Alaska 100%
— Eric K · Feb 5, 07:35 PM · #