Daschle

by hilzoy

What is it with these people and their taxes? First Geithner, now Daschle:

"Thomas A. Daschle, nominated to be secretary of the Department of Health and Human Services, did not pay more than $128,000 in taxes over three years, a revelation that poses a potential obstacle to his Senate confirmation.

The back taxes, along with $12,000 in interest and penalties, involved unreported consulting fees, questionable charitable contributions, and a car and driver provided by a private equity firm run by entrepreneur and longtime Democratic Party donor Leo J. Hindery Jr., according to a confidential draft report prepared by Senate Finance Committee staff.

A spokeswoman for Daschle confirmed last night that he recently paid back taxes in excess of $100,000. She said that Daschle, a former Senate majority leader, and his accountant discovered the error regarding the luxury car service and reported it to the committee after his vetting was completed. (...)

Because of an apparent clerical error by the equity firm, Daschle did not report more than $83,000 in consulting fees in 2007 and has not provided sufficient documentation relating to $15,000 in charitable contributions over three years, according to the panel's report. He and his wife, Linda, gave $276,000 in charitable contributions during the three-year period being studied by the panel, according to a Daschle aide.

His spokeswoman, Jenny Backus, said the presidential transition team "concluded that some of his charitable donations were not properly documented and may have been deducted in error," and the couple paid $5,693 in back taxes."

According to the Post article, Daschle realized that the car might be taxable back in June, and his accountant had intended to correct the error in his next tax filing. Still, I don't understand why people in public life don't just recognize that they should report anything that might even conceivably count as income, and do things right the first time.

What's more, I really don't like this, from the WSJ:

"Mr. Daschle told committee staff that he had grown used to having a car and driver as Senate majority leader and didn't think to report the perquisite on his taxes, according to staff members."

Part of what bothers me about this is the sense of entitlement: the sense that having a car and driver is just one of those ordinary things that happen to a person, not worth noticing or thinking of as compensation or a gift. 

I think Obama should ditch him. But then, while I didn't get down into the weeds and figure out the ins and outs of Geithner's tax situation, I thought he should have ditched Geithner too. And while I see the problem with uncertainty about one's Treasury secretary in the middle of a financial crisis, the fact that Obama didn't drop Geithner will make it a lot harder for him to drop Daschle, and whoever else comes along.

I also have to ask: didn't this come up during the vetting? If not, why not? And if it did, what's up with that?

Comments

[politickybitch]

Why do I hear "Only the little people pay taxes" in my head every time I read one of these articles?

[David Paul]

A sense of entitlement in most things coupled with a two tier system of justice and what one is left with is so far removed from the grand experiment the forfathers envisioned could cause one to question wether it has already died.

[Ugh]

Daschle's tax sins, it seems to me, are worse than Geithner's.

[Gary Farber]

Quote in my sidebar, from a well-known communist: "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."
-- Louis D. Brandeis

[tom p]

"didn't this come up during the vetting? If not, why not?"

It did. that is why, and when, he paid them. Team Obama just thought the heat was worthwhile.

[Bernard Yomtov]

These tales sound suspicious to me. How exactly were these errors and oversights discovered? If it was the result of an ordinary audit then it's just barely plausible they were innocent, though I don't really believe it. Unreported income of $83,000, not to mention the car business, are just too big to be overlooked.

My guess is that there was no 1099, or an incorrect one - that's the clerical error - and that Daschle filed on that basis, but really had at least some idea that there was an error.

And if this were a Republican Administration I'd be calling for his head, so I agree he should go.

[liberal japonicus]

I have a vague memory of a profile of Daschle that followed him across South Dakota and explained why he was being chaffeured around that seemed, again according to my vague memory, rather reasonable. Unfortunately, I can't turn the article up in google because the various combinations turn up a list biased to the more recent.

[gwangung]

My guess is that there was no 1099, or an incorrect one - that's the clerical error - and that Daschle filed on that basis, but really had at least some idea that there was an error.

reportedly, that's the case. It was reported in earlier years by the company and paid by Daschle. That year, the forms were prepared a sub for the firm.

How cupable that makes him, I don't know. More so than Geither, though, as far as I'm concerned.

[d'd'd'dave]

//Quote in my sidebar, from a well-known communist: "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."
-- Louis D. Brandeis//

What does this quote have to do with a politician who cheats on his taxes?

[d'd'd'dave]

//And if this were a Republican Administration I'd be calling for his head, so I agree he should go. //

Indeed.

[Matt12]

Ugh. When I read this I slapped my forehead and yelled, "Fucking Asshole!"

However,

From everything I've read it seems Daschle is going to be pretty integral to shepherding Health Reform through the Senate. The Senate is where Health care goes to die. If he can help get it through, and as indicated in the report he has paid the back-taxes, I'm willing to hold my nose.

I hope Obama addresses the funding problems the IRS has. Beefing that agency up, giving them more auditors, and sending them after the big-cheats instead of the small ones would do a lot to end this type of crap.

[Gary Farber]

"What does this quote have to do with a politician who cheats on his taxes?"

If we had fewer millionaire politicians, we'd have more politicans apt to notice teeny little $128,000 oopsies.

In 2002:

In 2002, median worth varied from $5,466 (±$385) for households in the lowest income quintile to $188,712 (±$6,116) for households in the highest income quintile.

Representatives (senators, governors, presidents, members of the U.S. House, and state legislatures) who share the economic circumstances of most Americans are apt to best understand the economic circumstances of most Americans, rather than the top 1% they actually tend to share circumstances with.

[evie]

Sometimes your self-righteous certainty is annoying. LIke now.

Yeah, just ditch him. Screw health care.

[d'd'd'dave]

Gary
Why do you have so much ill feeling towards people with money?

[Bernard Yomtov]

gwangung,

Could you clarify? Is the report that he got no 1099 one year from the firm because of a clerical error?

I'd say that makes him fairly culpable, more so than an erroneous form. It's a lot easier to overlook a mistaken figure than to forget you got any income at all from someone.

[Gary Farber]

"Why do you have so much ill feeling towards people with money?"

Why do you think you can tell what my feelings are?

[AIMAI]

If we need him to "shepherd" health care through let him do it unofficially, as a "consultant" and give the post that requires confirmation to someone else. I've always detested Daschle and this just makes him untenable. He's been a lobbyist, or in the pockets of big interests, for a long time. I don't trust him on health care at this point.
aimai

[Redhand]

Oh, the elites believe in paying taxes, . . . when they get caught.

Obama should ditch this guy, especially for this nonsense: "Mr. Daschle told committee staff that he had grown used to having a car and driver as Senate majority leader and didn't think to report the perquisite on his taxes, according to staff members."

Who does he think he's kidding?

[bedtimeforbonzo]

"What is it with these people and their taxes?"

I mentioned in von's pinstriped Open Thread about several of my co-workers walking a very fine line with this accountant who is a Deduction King. Hard to have a problem with that after this Geithner and Daschle crap.

---

"I thought he should have ditched Geithner too . . "

Here I thought I was in the Kitty minority. FWIW, Russ Feingold agrees with you (about TG).

[gwangung]

Could you clarify? Is the report that he got no 1099 one year from the firm because of a clerical error?

From what I understand (and I more than occasionally get it garbled), it was a clerical error on the 1099.

But I have no problem if Daschle was forced out over this because of the size of the figures, less so for Geither.

[liberal japonicus]

Doesn't this correspond to the time when Daschle left the Senate?

This is from the fox news site, but it seems to be a straightforward listing of the points for those who might be better able to explain this.

It also seems to have come to light because of the Obama vetting team, which leads me to suggest that we take the vetting team and make them a permanent part of the IRS.

[just me]

I struggle with the concept that you have so much income you don't notice an error of almost 90 thousand dollars. And even then, I would think a comparison to the previous years returns would make the accountant wonder why there was almost 90 thousand less in income.

I think it is difficult to defend another tax cheat, and I think it is harder to even make the argument that Daschle is the only person who can possibly run the department or that there is some reason to confirm him and only him quickly.

[MoZeu]

Well, here's what I think. I don't have a lot of money and so errors on my taxes over the years wouldn't amount to very much. But if someone went through my taxes, they'd find income I failed to report (waitressing tips, almost impossible to keep track of, and who is really going to guesstimate high?), charitable contributions for which I have insufficient documentation, and probably other things I did wrong or just threw up my hands and did my best at before the deadline.

And just because someone is a Senator doesn't mean they don't have the same kinds of niggling issues on their taxes. I think it is absurd to make such a big deal out of this.

[Turbulence]

I think it is harder to even make the argument that Daschle is the only person who can possibly run the department or that there is some reason to confirm him and only him quickly.

Daschle isn't being brought in to "run" the department so much as to shepard major health care reform through Congress. There are lots of people who could run the department, but it seems to me that the pool of candidates who have as much experience with the legislature and have strong understandings of the health care system is really quite small.

[Sure you don't live in a glass house?]

Is it news that there are more ways to screw up one's tax return than there are people in the United States? Have you ever been audited? How do you know for sure your tax returns have all been perfect? Why are so many inclined to leap to the conclusion that the underpayment was evasion, without convincing evidence?

Do I like that Senator Daschle owes taxes? No. But mostly it's because it's a side show that too many people seem willing to go all attitudinal over. At this point I am with Evie on this one: "Sometimes your self-righteous(ness) certainty is annoying. LIke now. Yeah, just ditch him. Screw health care."

[Bernard Yomtov]

Is it news that there are more ways to screw up one's tax return than there are people in the United States?

No.

Have you ever been audited?

Not really. I've had some errors gently pointed out by mail.

How do you know for sure your tax returns have all been perfect?

I doubt they have been.

Why are so many inclined to leap to the conclusion that the underpayment was evasion, without convincing evidence?

I'm dubious because of the large sums involved. Sure, if the underreported income was $830, or $8300, rather than $83,000 I'd attribute it to simple error. In fact, having read the account LJ linked to, I'm more sympathetic than I was, but still a little dubious.

Another answer to this question is just that the vetting process never seems to turn up anyone who overpaid. You never read that cabinet nominee Jones, upon reviewing her returns in preparation for her confirmation hearings, discovered that she had overpaid her 2006 taxes, and has filed for a $35,000 refund.

It's just a little annoying how the innocent mistakes are always in the same direction.

[gwangung]

It's just a little annoying how the innocent mistakes are always in the same direction.

How often does this happen in the general population?

[Art L]

If the car and driver was a gift, there was no IRS mechanism for Daschle to report it.

If it was compensation, his employer should have put it on his W-2.

I don't think you can fault Daschle on this one. The error was on the part of the person who supplied the car and driver.

[Nell]

Why are so many inclined to leap to the conclusion that the underpayment was evasion, without convincing evidence?

I can only speak for myself. But what makes me think it was evasion is the car & driver provided by Leo Hindery. Daschle knew full well where the money was coming from for that, and therefore that it was reportable.

His comment that he'd grown used to being chauffered -- could there be a more clueless or irrelevant response to the problems people are having with this? That explains why he wanted to have a car and driver, but not why he seemed to think that having one would always be a no-need-to-report perk of the job.

Feh. He knew it was a gift, or at the outermost stretch "compensation" for some lobbying chore for Hindery, and either way reportable.

The irony is that I just came here from reading a report that made it sound as if Daschle were actually in favor of single-payer, or at least a public pool that could be a transition to single-payer. That accords with exactly nothing Tom Daschle has ever done or said before, and strikes me as more fodder for the hopeful rabble.

If I believed him, this would create a tension not unlike the one evie's experiencing. But I don't. He's a gigantic Washington whore.

If he's the only gigantic Washington whore who can shepherd an Obama health care plan through Congress, then find another way to employ him that doesn't require confirmation.

Evie, don't get your hopes up too high even if Daschle's confirmed. Dodd's an insurance whore (like most Senators from Connecticut) and ruled out single-payer.

[d'd'd'dave]

There seems to be alot of forgiving spirit in the comments here. Daschle must not be a republican.

[Gary Farber]

"There seems to be alot of forgiving spirit in the comments here. Daschle must not be a republican."

Let's see: the post says "I think Obama should ditch him."

I count 14 comments saying "dump him" or variants thereof, using words like "detest" and "whore". Several comments are neutral. 4 comments say he should be kept on.

So, in conclusion: are you on drugs?

[Hartmut]

I think this would be a golden opportunity to introduce a bill requiring in-depth vetting and auditing for all political/high public offices* (congresscritters, ministers, the judiciary etc.) on a yearly basis**.
My guess is there will few be found to be completely clean and many to be significantly dirty. Extra penalties should be attached to that (and a dunce cap for bonus).
And unless there is strong exculpatory evidence, drop Daschle.

*and candidates for those
**an I mean really thorough not perfunctory
If there already is such a law, it needs more teeth.

[OCSteve]

First Geithner, now Daschle

Well, don’t forget Rangel… Dude is in charge of taxes… Not to mention the interest free mortgage and abusing rent control…

I credit you guys with calling out your own. There are plenty of corrupt Republicans – but when their problems came to light they generally were not left in charge of committees responsible for the very laws they were violating…

Most ethical Congress evah!

I love the bill introduced by Carter: The “Rangel Rule"…

[Ravi]

Geithner I have a lot of sympathy for. According to one news article I read, around half of "similiarly situated people" (i.e. working for an orgganization like the IMF) made the same mistake. Another tidbit I remember reading is that Geithner's mistake was so common that the IRS set up an amnesty program for it, just so they could get the money (rather than tie it up in lawsuits and such). So while the whole thing sucks (and is ironic because he was nominated for Treasury), it just feels like the Geithner outrage was people either being unreasonably dogmatic / perfectionist with respect to Cabinet appointees or people trying to score political points. If we're going to disqualify as Cabinet members everyone who's ever made a mistake using TurboTax and didn't spontaneously correct it on their own, we're going to seriously limit the pool of potential Cabinet talent for little useful purpose.

Daschle sucks. His situation reflects the yawning gap between Americans and their politicians. And let's be real, while there is a PR hit for Obama, there's basically no chance this is anything more than a speed bump in the confirmation process. Daschle was a senator for a gazillion years. There's no way his ex-colleagues don't confirm him, unless a "dead girl, live boy" issue surfaces. And given his extensive experience with the Senate, which is where the action will be on health care reform, there's a serious argument that he's the most qualified person for the job, bar none. So you can easily argue that even given this problem he is the right choice. But I don't have to like it. And I don't have to like the casual political corruption Daschle's situation reflects. And if we were talking about a less important issue area, I could see the "governance calculus" going the other way even if the political calculus might not (in other words, if we weren't talking about health care, the situation might well end up more like Bill Richardson's nomination for Commerce).

It all just sucks and there are no good choices. At the end of the day, I think I feel that, in this case, the ends justify the means, so I'd wade in the muck, take a shower and try to fix the system *after* we've taken care of the 47 million uninsured... But I can understand how reasonable people can disagree on this.

[tightwadfan]

I had much more of a problem with Geithner's tax evasions. I think Daschle's errors are plausible. Unlike Geithner, Daschle is not up for head of the IRS or other financial agency, and Daschle has never claimed to be some kind of financial expert. So I would have lower expectations regarding tax returns.

Most of the unreported income is due to the car service. The car service was provided by the company he was working for. If it were me, it wouldn't have occurred to me that it might count as reportable income. For example, I used to work for the federal government and they had a MetroCheck program which supplied employees with Metro fares, up to $100 a month. It never occurred to me until the Daschle story that those Metro cards might count as extra income. I don't think anybody in my office who participated reported those cards on their taxes.

The unreported $83,000 was left off the 1099 provided to Daschle. Not his fault. When I do my taxes I go off the 1099's, assuming they're correct.

The charitable contributions - I think it's plausible that he may have thought some of the organizations qualified when they weren't. I'm willing to give him the benefit of the doubt until more details are available.
So many people I know cheat on this area of their taxes anyway (mostly donating stuff and claiming full, not depreciated, value). it's not particularly unusual or entitled. call me if Daschle set up a "charitable" trust to hide income.

Geithner's evasion bothered me much more. Anyone who's had self-employment income finds his "mistake" just really hard to believe. Especially because of the job he was up for. Really upsetting.

Not saying Daschle may not be qualified to head HHS, but I don't think the tax issues disqualify him. More concerned if he has connections to health insurance companies.

[Feddie]

Kudos to Hilzoy, Bernard, and others for placing principle over political expediency.

The rest of you are disqualified from ever criticizing another Republican nominee with similar problems.

[Feddie]

I am curious as to why my last comment was deleted.

[Feddie]

Never mind. Sorry about that.

[Brett Bellmore]

When fish vet fish, they don't notice they're dripping wet.

People enter Congress only moderately well off, spend years with elevated expenses and a good, but not fantastic income, and leave millionaires. The rational conclusion is that pretty much the whole political establishment is crooked.

[AIMAI]

Was it deleted? I just thought it was ignored.

aimai

[liberal japonicus]

The rest of you are disqualified from ever criticizing another Republican nominee with similar problems.

I love the notion that a mistake involving taxes yields such a black and white judgement. On the other hand, I will miss what von has to say about Republican nominees with similar problems.

[Ugh]

Per the WaPo:

Thomas A. Daschle waited nearly a month after being nominated to be secretary of health and human services before informing Barack Obama that he had not paid years of back taxes for the use of a car and driver provided by a wealthy New York investor.

Daschle, one of Obama's earliest and most ardent campaign supporters, paid $140,000 to the U.S. Treasury on Jan. 2 and about two days later informed the White House and the Senate Finance Committee, according to an account provided by his spokeswoman and confirmed by the Obama administration.

Although Daschle had known since June 2008 that he needed to correct his tax returns, he never expected the amount to be such a "jaw-dropping" sum and "thought it was being taken care of" by his accountant, spokeswoman Jenny Backus said.

Buh bye.

[Phil]

The unreported $83,000 was left off the 1099 provided to Daschle. Not his fault. When I do my taxes I go off the 1099's, assuming they're correct.

But, see, this is part of the problem. That the people who work for nearly their entire adult lives for the Federal government have to have a 1099 tell them that they had $83,000 more than they thought they did. I would certainly notice if I had an additional $83,000 in income.

[GoodOleBoy]

One can hope that these kinds of problems, not excusable but they demonstrate that too much attention must be devoted to tax issues by taxpayers, will help move our lawmakers to consider an approach to raising federal revenues that is not so complicated (requires so much record keeping).

[Feddie]

AIMAI-

If you wish to ignore a compliment, be my guest.

[Turbulence]

I think Daschle's errors are plausible. Unlike Geithner, Daschle is not up for head of the IRS or other financial agency, and Daschle has never claimed to be some kind of financial expert. So I would have lower expectations regarding tax returns.

I don't get this reasoning at all. Finance, economics, tax law, and accounting are very different fields. Yes, they all involve money, but experts in any of those fields are unlikely to be experts in any of the others. Being a major economist does not mean that you know or care a great deal about the tax code.

Honestly, this sort of thing reminds me of ignorant folk who assume that all engineers are interchangeable...

[cleek]

ditch him. Geithner, too.

it looks terrible and it's a huge distraction.

[AIMAI]

Turbulence is exactly right on the Geithner thing. Being head of treasury does not make you an expert on the tax code. I don't get why so many commenters don't get that.

But on a different point this is a perfect example of the memory hole. George Bush famously said on *national TV* and as part of his push to exempt very wealthy people and corporations from tax liabilities of all kinds that *rich people don't pay taxes* because they can hire lawyers and accountants to make those taxes legally vanish. So, his argument went, there's no point in raising taxes on rich people. Elsewhere, equally famously, he referred to the very wealthy as "his base" and the Republican party as a whole--not the voters, mind you, but the elite representatives--have always prided themselves on being patronized by the very wealthy and being members of the wealthy. The notion they are now peddling that tax paying is a form of citizen duty that Daschle and the Democrats are evading is an entirely novel argument for the "tax is theft" crowd. It was literally just a few months ago that their chosen standard bearer, John McCain, was making the exact same argument. Can we have a little less of this convenient aphasia?

aimai

[Ben Alpers]

Ditch him for all the reasons cited above.

I understand that Daschle was chosen to shepherd health care reform through the Senate. But his record as Senate Majority Leader raises plenty of questions about his likely effectiveness at this task.

[Model 62]

I'm all for dropping him, but if we continue to insist on barring scofflaws, petty criminals, liars, and cheats from public service, they're be nobody left to lead us.

[bedtimeforbonzo]

"Kudos to Hilzoy, Bernard, and others for placing principle over political expediency."

Thanks, but I don't know why Republicans seem so astonished that Democrats would put principle over political expediency. Hell, we're the party known for eating our young. (On the other hand, if I remember correctly, the GOP allowed Larry Craig to twist in the wind in the first days of his bathroom sex scandal.)

Anyhow, I take no pleasure in being disappointed by two of Obama's high-profile cabinet nominees and their respective troubles.

I was puzzled how Geithner did not get beat up even more in his Senate testimony and wish other Dems had followed Russ Feingold, who talked the other day in an MSNBC interview about policy concerns he had with Mr. Geithner.

Very dismaying is the way these guys did not come clean with their tax problems from the jump with Team Obama.

(cleek: For better or worse, I think we are stuck with Geither now. Just from the reactions here, I don't see how Daschle will make it; he ought to just step aside gracefully and ride home in his buddie's limo.)

[Model 62]

"there'll", dangit.

[gwangung]

I was puzzled how Geithner did not get beat up even more in his Senate testimony and wish other Dems had followed Russ Feingold, who talked the other day in an MSNBC interview about policy concerns he had with Mr. Geithner.

Given that it's a common problem that the IRS has a set of procedures to take care of it, I think that sort of thing would fall more into demagog territory--you'd also be beating up normal taxpayers.

Daschle is entirely different.

[Gary Farber]

"Just from the reactions here, I don't see how Daschle will make it"

Here's a hint: no U.S. Senators post to ObWi.

[Neuyawker]

Daschle was a senior consultant for a private firm when the car and driver were provided to him by the company for which he worked. A car and driver provided to an executive which saves work time and enables that executive to attend to a larger slice of business in the course of a day which might require his presence at several such meetings, is a tool in the same fashion that a cell phone is a tool. For many many years now, financial and law firms in NYC have provided a car and driver to all workers (non-shift) who have to work late into the night on a fast moving deal, or an accumulation of business. Should those workers be required to pay income tax on that? This is an issue because some politicians and businesses who are afraid of the implications of a reformed healthcare system make it one. This is precisely what lobbying money buys.

[hilzoy]

Fwiw: I don't really mind either the missing month of income or the charities. About the missing month: apparently, the company left the month out of his form. I can easily see just reading the total off the form, and/or just sending it on to my accountant. I know my annual salary, and I know how much money I actually get every two weeks, but do I know what my annual income after withholding etc. is, broken down by source? No. And given that withholding is pretty significant, I can see being off by thousands of dollars. If I had Tom Daschle's income, I could see being off by tens of thousands.

About the charities: I have never bothered to look up the actual forms on any charity I have given to. On reflection, I hope that my accountant does, and I try to be on the safe side, but still, I can see this happening too.

It's the car that bugs me.

[wj]

As we all know, the tax laws are so complex that it is probably impossible for anyone to file a correct return. The best one can do is guess high on everything, in order that any mistake that is noticed will result in a refund (eventually) rather than penalties.

Maybe that would improve if every member of Congress, and every member of their families out thru first cousins, got audited every year they were in office -- and also for 4 years after leaving Congress. Also, forbidden to use anyone else to help file their return. Then, suddenly, the laws might get rewritten to something that an ordinary citizen could follow.

[Slartibartfast]

I'm highly tempted to take Daschle and Geithner, together with the top-400 folks paying a lower tax rate than I do, as cases-in-point that our tax law is so complex and cumbersome that it's difficult to pay properly OR fairly.

But I think most people know that already. My choice of remedies for tax fairness would involve removal of loopholes rather than jacking up the upper-bracket rates. Am I wrong?

[Catsy]

While I agree that the quote about having gotten used to the car and driver was tone deaf, I actually know where he's coming from on this. I've worked at a number of jobs where I got so used to the perks that I took them for granted, they became part of normal life for me. I even forgot to return a spare laptop once, for over a year, because the asset tag had worn off and I'd forgotten that it was corporate.

To me, this was a crappy laptop that probably wasn't worth more than $500, and it just really wasn't on my radar. To a lot of people, that's their rent money, and forgetting about a laptop is mind-boggling. To me it was just spare hardware, and even when I had the need to use it it just wasn't on my radar.

I have no problem extrapolating that to someone who is probably worth seven figures and doesn't think anything more of being driven around than I would about the free bus pass I get from work that I'm technically supposed to return if I leave. I don't like that it's the case with our elected officials, but it doesn't register to me as anything malicious or horrible.

[Phil]

My choice of remedies for tax fairness would involve removal of loopholes rather than jacking up the upper-bracket rates. Am I wrong?

Why does it have to be one or the other?

[JayS]

"It's the car that bugs me."

Excuse me, I haven't been following this closely, but the car seems the least likely issue to me, since it wasn't intuitively obvious to me that it was taxable income. Now that I see that he worked for the firm that provided the car and driver, and wasn't just getting a favor, I am less impressed with that portion of the story. I can see how it can be interpreted as taxable, but not recognizing that automatically doesn't strike me as all that scandalous. Assuming there was some business reason for some of the car's use, there needs to be more to the story to raise my concern.

What is shocking is how you could owe $128K in taxes for 3 years of car and driver. That would make the benefit worth at least $320K with a 40% combined US and NY tax bracket, with none of it legitimate business expense.

[Slartibartfast]

My choice of remedies for tax fairness would involve removal of loopholes prior to jacking up the upper-bracket rates

Thought I'd fixed that.

Doesn't have to be one or the other. Both might be good, but given that the top 400 are paying, what, 17 percent? I'd consider that perhaps there are loopholes that might bear scrutiny.

Of course it all might just be that there are a lot of folks who are paying a huge amount of taxes to foreign countries, and that their tax rate is being misrepresented somehow. This is an area of tax law that I unfortunately haven't had the pleasure of having to learn about.

[Nell]

btfb: I think we are stuck with Geither now. Just from the reactions here, I don't see how Daschle will make it

Our reactions have very little to do with Daschle's likelihood of confirmation. This is the Senate club we're talking about, and Daschle was Majority Leader. The Senate that gave Ted Stevens a standing ovation.

The Democratic Senators are the same ones who let Joe Lieberman keep the chair of a major committee that held virtually no hearings during the last two years and who campaigned with the opposition party's presidential candidate.

Obama will decide if Daschle's nomination goes forward. If it does, he probably gets confirmed, with as many Republican Senators as necessary (the ones running in 2010, especially) getting to cast pursed-lips votes of disapproval and the retiring and safe-seat members of the rich white club providing the margin needed to confirm.

[Bob L.]

Somewhat belatedly, I'd like to take issue with Hilzoy's statement: "Still, I don't understand why people in public life don't just recognize that they should report anything that might even conceivably count as income, and do things right the first time."

No one is required, legally or morally, to pay any more taxes than the law mandates. It is often possible, and sometimes easy, to come up with ideas that make some things received by a taxpayer "conceivably count as income" when in fact the law does not treat them as income. Often there are gray areas, and the taxpayer is entitled to take the benefit of the doubt as long as the areas are truly gray. I'm not a tax attorney, and I've finally had to stop doing my own taxes (despite a law degree and even some brief experience as a tax practitioner; it's just too damned complicated), but I know enough to know that sometimes you really don't know whether something is taxable income or not. And things are even more complex with deductions.

Also, sometimes people honestly forget. I had the experience of not receiving a 1099 a few years ago for one item of income, and it was only at the last minute, while going through some other papers, that I was reminded of the particuular item. Okay, it was a one-time thing, but I really had forgotten until the last minute. I reported it on my return, which spared me embarrassment when the bank that paid me the money sent me a belated 1099 after I'd already filed.

I'm not saying Daschle didn't know exactly what he was doing, and I think his behavior in this matter sucks. But I refuse to generalize from that to all public servants and decree that they all have to report and pay taxes on anything that gives off even a faint odor of taxability. I also refuse to disqualify him solely on that basis. Tax evasion is uglier than running stop signs, but it's not "pay to play." He didn't try to weasel out when alerted, he paid in full, and he's learned a hard lesson.

I wonder how many of us have cut a corner on our taxes and lived to tell about it. Who wants to go first?

[JayS]

Slarti,
The 17.2 percent number is the 2006 number based on AGI, not gross. I'm pretty sure that's after most loopholes (what loopholes exist these days?), or even foreign taxes, since I think they are mostly deducted and not using the foreign tax credit at these levels. The effective rate is pretty much because of lower marginal rates and particularly capital gains rates if these Taxprof numbers are accurate. Note that the AGI increased dramatically, which doesn't suggest income hiding. The percentage of income coming from various sources didn't change dramatically from 2002 to 2006. That was deliberate tax policy, not exactly a loophole to my way of thinking. It might be the wrong policy, but not a loophole.

[Ugh]

hilzoy: I know my annual salary, and I know how much money I actually get every two weeks, but do I know what my annual income after withholding etc. is, broken down by source? No.

Your W-2 Box 1 should list your annual salary, reduced only by 401k type withholding. Though I only know that because I got one of my 2008 W-2s yesterday.

Slarti: I'm highly tempted to take Daschle and Geithner, together with the top-400 folks paying a lower tax rate than I do, as cases-in-point that our tax law is so complex and cumbersome that it's difficult to pay properly OR fairly.

There's nothing about the complexity or cumbersomosity of the tax law that leads to the top-400 folks, at least, paying a lower effective tax rate than you (or me). It's a function of 15% rates on capital gains, with an assist from the same rate on dividends. They should be equalized with the rates on labor.

But I think most people know that already. My choice of remedies for tax fairness would involve removal of loopholes rather than jacking up the upper-bracket rates. Am I wrong?

Well, yes. The 15% rate on cap gains is a large source of unfairness. Loopholes are a source of unfairness, but they are currently swamped by the rate differential.

[Ravi]

Hey, I'm all for a 1986-style tax reform, closing loopholes, simplifying the tax code and broadening the base as long as we maintain (or, ideally, enhance) the basic progressivity of the tax code.

[BEGIN stimulus-sidebar]
Ironically, I think increasing the progressivity of the tax code is one of the few ways to raise revenue right now that won't have a contractionary effect on the economy. If you give tax refunds to people with a high marginal propensity to consume (i.e. generally, speaking poor people because of the diminishing marginal utility of consumption) they will spend most of it - expanding the economy in exactly the way we want right now. If you tax people with a low marginal propensity to consume (i.e. rich people - again because of the diminishing marginal utility of consumption), the fraction of spending you lose from the economy per dollar of revenue raised will be much smaller. Gee. I guess a little wealth redistribution might be pretty good *debt-free* medicine right now...

Who's against that debt-free progressive medicine? Oh, right. The party whose Presidential candidates love flat and sales taxes because they think their wealthy contributors *still* pay too much in taxes. They may claim they're against the stimulus because of debt being passed on to our children, but when their preferred stimulus is all tax cuts all the time (where the country gets nothing tangible, like improved infrastructure, for the stimulus beyond the jolt to current consumption), you know where their priorities really lie...
[END stimulus-sidebar]

To put it another way - if you think the tax code is too complex, you can blame the party that doesn't take taxation seriously and tries to hide the cost of their tax cuts with crazy technical manuevers (remember the sunset provisions on the Bush tax cuts, for instance)? The other party is all for a loophole-closing tax code simplification (with the important caveat of preserving and/or enhancing the EITC and other tax credits that enhance the progressivity of the system). But somehow it just doesn't get done... I wonder why.

[KM]

Worth taking a look at today's Glenn Greenwald re: the Daschles. Hopefully you will have neither much sympathy nor much self-righteousness about self-righteousness after that. Those expecting great things on the health-care front from this fellow might also be a bit more hushed.

As for why this might be happening ... well, a few good observations from dday over at Hullabaloo.

[Slartibartfast]

Ah. Well. I'm out of answers, then. Perhaps we should treat investment income as regular income, and not as something else.

[J. Michael Neal]

I have to admit that it probably wouldn't occur to me that the amount of income tied to whatever perks I get, such as a car service, weren't included on the 1099 I got. The 1099 is, theoretically, supposed to tell me how much my employer has paid me. Why isn't all compensation recorded on the 1099? How would I know how much income I'm supposed to declare for it?

[bedtimeforbonzo]

Nell @ 3:17: Good point. I wrote that thinking both emotionally and logically forgetting how clubbish the Senate is, as you state.

[liberal japonicus]

The Greenwald piece quoting Taibbi is quite devastating, though it gives me a 'head on a pike' vibe. However, in Daschle's defense, he was unseated in a bitter election that broke a lot of unspoken assumptions about collegiality and wasn't decided until the last moment, I can see how things might have taken place. I tend to agree with the wife of Caesar reasoning, and agree with the calls to have him step aside, but I do think there is a difference between arguing that he step aside and making a claim that he is an insufferably greedy bastard who represents the sum total of wrongness with our system of governance.

[Gary Farber]

Matt Taibbi doesn't tend to under-state his opinions.

[Nell]

I respectfully disagree with lj. Daschle represents a great many of the things that are wrong with the Democratic Party and with our corporate-dominated, non-representative politics in general. I've thought this for at least a decade.

I've cited this Tom Tomorrow cartoon before, but it remains, sadly, relevant.

I'd have a much tougher time being a principled critic of Bernie Sanders or Russ Feingold in a similar situation, because they actually give some meaning to being in the Democratic caucus: making the case to the public about how Republican policies and imperial executive practices do harm, advocating for reforms that directly address the abuses and their root causes.

As to Senate collegiality: funny how it always works in favor of Republicans and semi-closeted Republicans, but when push comes to shove, Dems can't count on the same clubby consideration. Republicans are totally willing to engage in bitch-slapping politics whenever they deem it useful. Snakes on the other side of the aisle, a lot of whores on ours.

Maybe ten members of the Senate have any real commitment to people outside the elites they've spent all their time with for the last twenty years. It's a structural problem, with structural solutions that are barely visible on the margins of the political landscape these days.

[KM]

You don't have to completely agree with the tone of Greenwald or Taibbi. And of course Daschle has lots of company in his circles. But there are serious problems with this guy as a pick, and I wouldn't shed one tear if (implausibly) his nomination didn't pan out.

On the latter note, and talking of "clubbishness", note the NYT's article on Republicans' reaction: Republicans Take a Wait-and-See Stance on Daschle.

Must be the Republicans' fabled magnanimity.

[liberal japonicus]

Nell, that's a very fair point and KM's is as well. But I'm wondering how much blame we assign to the system as it is developed and how much we assign to Daschle himself. This, coupled with the reflex to denigrate everyone involved in public office, which then leaves a field of scorched earth available to plant any sort of demagogic notion, makes me think that the system more of a problem than the individuals involved.

Daschle, being from South Dakota, is going to naturally represent some of the problems of the system because the population disparities built in the system. So too, the notion of senatorial collegiality, while often breaking for Republicans, is not clearly an evil, as it helps moderate the legislative branch as a whole (cf. the Clinton impeachment). If we throw it out, I think there is a strong risk of either legislative gridlock, which then requires Obama to take steps that will be held up as becoming the imperial executive, or a body as ill-tempered and juvenile as the House. God knows we don't need that.

In this light, it might be interesting to read this particular thread over at Crooked Timber where Charlie Stross answers some of the questions raised in a discussion of his works.

Miriam’s intervention in Clan politics in the second book (The Hidden Family) generates blowback, with a vengeance, because she’s failed to realize that the changes she is proposing will destroy the power base of a group of elderly women who, through their iron grip on the arranged marriage structure of the Clan, have carved out a tolerable niche for themselves in an otherwise intolerable world.

I hope the suggestion I am making is comprehensible even if you haven't read the Merchant Prince series, and I don't want to claim that the Senators are going to struggle if they get put out in the cold, cruel world, but I do get a bit uncomfortable with the more florid expressions of Daschle's perfidy.

This is not to disagree with you at all on the corporate-dominated, non-representative nature of politics in general. I'm just not sure if Daschle is necessarily on the top of the list of bodies to be dragged around the city.

[Nell]

I'm not for dragging Daschle through the streets on the basis of this tax incident.

I'm for not offering the slightest bit of support for him, since I had the same reaction that Matt Taibbi did when I learned at some point last summer that Daschle was an Obama insider.

Daschle was and is a party leader. I hold him very responsible, among others, for the utter, worthless, stand-for-nothing, let-the-other-party-drive-the-country-into-the-ground approach that the Dems have taken. One more Tom Tomorrow may illuminate my sense of the purposely missed opportunities involved.

Hey, how 'bout those Stillers?

[liberal japonicus]

No worries, Nell, I don't think you are in any way wrong. I'm just dealing with some problems here at my workplace and it is difficult to figure out where responsibility lies, with the system that creates the situation or with the individuals that go along with the system. Thus my take.

And I miss watching the Super Bowl here in Japan, and wonder what to think of Springsteen.

[Gary Farber]

"...and wonder what to think of Springsteen."

I'm curious what the question is: multi-million-dollar earning rock star promotes himself with one of the biggest promotion opportunities there is: is there something new here, for Springsteen, or anything else? Was he previously abstaining from making money, or appearing in major venues? What's the question here? It's not as if yesterday he was some kind of purist folkie, refusing to sell record albums for money.

I'm not trying to jump on you, LJ: I just really don't know what the question is. What is it you're trying to decide between?

[Nell]

Oh, I'm sorry you had to miss this one, lj. I haven't watched a Super Bowl since I don't know when -- but this one drew me in.

Re Springsteen: He was rendering unto Caesar what is Caesar's, and enjoying the heck out it while doing so. Can't argue with that approach, and it's pure Bruce. He's a professional entertainer who's never just phoned it in. What, did the LA Times writer really think he was going to do 'This Land Is Your Land' or 'Bring 'Em Home'?

---- main topic:

The short answer to the question about responsibility is usually "both". I don't expect purity, but I know a complete creature and perpetuator of all that stinks about the system when I see one.

[liberal japonicus]

I may have missed it, but if the question were which artist best completes the following list?

Paul McCartney>Rolling Stones>Prince>Tom Petty>???

Bruce would not be the artist I would pick. I'm not suggesting that he is a purist folkie uninterested in filthy lucre, but I was just a bit surprised by it.

[Slartibartfast]

The part about going to Disneyland disappointed me, as did Bruce's apparent willingness to let the audience do a large part of the singing for him.

It was moderately phoned-in. On the bright side, though, he actually did his own vocals. As, I think, did the crowd.

I don't expect him to be non-commercial, but if he got much more commercial, he'd have had a Pepsi tattoo on his forehead.

I still like his music, though.

[Ravi]

I used to be down on the job Daschle did as minority and majority leader. Then I met Harry Reid. To take one example, the agreement after the 2000 election that had control of the chamber switch if the balance of the parties changed was, as far as I can recall, all Daschle. Not to mention the wooing of Jeffords afterwards. Sure the Bush administration's petty vindictiveness helped, but Daschle got it done and, absent 9/11 and "all terror all the time", I think the 2002 midterms would have gone quite well... setting up a more favorable playing field for 2004.

Yes, Daschle's lobbying ties are troubling, but this is Obama's approach... bring everyone to the table and try to hammer out something fair. Yes, it might not work, but it is what he promised... and if it *does* work it is actually what we need after an era of scorched-earth politics. And, at the end of the day, given his remarkable campaign, I think Obama deserves the benefit of the doubt.

A lot of the fearful chattering reminds me of Obama supporters circa 2007... And in the general before the financial crisis. Why isn't he doing better in the polls? Obama should do this. Obama should do that. But, in both cases, Obama had a plan and looked many more moves ahead than his opponents.

Obama inverted Clinton-style campaign strategy. He showed that, if you have a plan that you're executing, winning the daily news cycle doesn't matter. I mean McCain was *way* ahead on that front. Why do we think the day-to-day ebb and flow matters more while governing? I'd bet it matters *less*, not more.

[Phyllis]

I had no idea that a non-cash benefit like a car and driver would be something you would list as IMPUTED income (which is what this was...wealth created or acquired internally, or from non-cash sources.)...when it's not part of an official compensation package where you'd get a W2 or some other official form for reporting to the IRS. Wikipedia says imputed income is difficult to identify and very difficult to tax. No where in MY tax organizer packet am I asked to list non-cash compensation or imputed benefit from my work. Daschle is square with the IRS. This is NOTHING like the criminal crap going on with the Bush Administration. Let's see him confirmed and move forward.

[Jim1234]

Obama is an idiot. Some vetting process eh? Crooks, liars, cheats, and lobbyists! Change you can believe in. And Obama is standing by his man, for now.

Obama out of the gate has stumbled. Ya'll should feel embarrassed.

[Slartibartfast]

I have no love for Daschle at all, but I think this is the wrong issue to focus on. To me, this is a mistake easily made, and easily rectified, not tax evasion.

For me, a bigger question mark is on Daschle's lobbyist background, and whether Obama might want to consider that the ban on going from government to lobby (which I applaud, mightily and loudly, BTW) might be better if it were bidirectional.

[Jim1234]

Well Daschle is out. He was a good soldier and fell on his sword. I wonder if Obama handed him the weapon. Daschle certainly made Obama look like a dufus, not a potus.

"I think Obama should ditch him."

Maybe he did, although O was last hear singing (absolutely) "Stand by your man."

"I also have to ask: didn't this come up during the vetting? If not, why not? And if it did, what's up with that?"

Obvious question. The answer is just as obvious. Obama did sloppy work. Obama is a newb, and he's delivering as such.

Additionally, O has pegged 3 or 4 tax cheats to live off our tax dollars (what was Richardson gigged for?).

Even Bush did a better job vetting. At least H. Miers wasn't a crook.

[liberal japonicus]

This thread may be over, but I think it important to note this

Already depressed by the recent discovery that his younger brother is stricken with brain cancer, Daschle wasn't prepared for another week of Senate hazing and damaging headlines.

link

[gwangung]

Additionally, O has pegged 3 or 4 tax cheats to live off our tax dollars (what was Richardson gigged for?).

Wrong, in both number and characterization.

Better quality trolls, pleaser.

[Gary Farber]

"For me, a bigger question mark is on Daschle's lobbyist background"

Daschle hasn't been a lobbyist, and thus doesn't have a lobbyist background.

[bedtimeforbonzo]

ME: "Just from the reactions here, I don't see how Daschle will make it."

GF: "Here's a hint: no U.S. Senators post to ObWi."

Which, of course, was, and is, true.

But I'd submit, as was my impulse when I made that remark the other day, that the collective wisdom of some ObWi posters -- russell, Slarti, Nell, hilzoy, to name a few -- is just as great as the collective wisdom of the U.S. Senate and, thus, when a great many of them (some on the very liberal side of things, to boot) voiced concerns or said to outright dump Daschle (using that as a pulse point for how quickly he was sinking in the tax-cheat quicksand) he was a goner.

Kudos to Daschle for not dragging this out any further and becoming nothing but a distraction as President Obama tries to steer the country in the right economy direction.

To those who are calling Obama an idiot over the fact that some of his Cabinet nominees were not perfectly clean, I am sorry: You must be going through BWS.

Bush Withdrawal Syndrome.

Take two aspirin and call Dick Cheney in the morning.

[Slartibartfast]

Guess NPR was wrong, then?

I guess, technically, yes. He's working with a bunch of lobbyists, but not personally doing any lobbying.

Ok, then. Retracted.

[bedtimeforbonzo]

Hope.

Humble.

Humility.

Definitely no Bush.

[mdl]

Belated answer to the guy who mentioned the MetroChecks: Those are non-taxable benefits, which is exactly why employers offer them.

The code is Sec 132(f), if you want to look it up. Employers can count up to $100/mo for certain types commuting expenses as a tax-free fringe benefit. The rule was designed to encourage employees to use mass transit. Just one of many little government programs implemented as tax rules and thus clogging up the code.