Media treatment of the income tax dodges of Treasury Secretary-nominee Tim Geithner give us an early indication of the severity of the double standard that will exist for Democrats and Republicans in the age of Obama. Indeed a double standard has long existed, but the hair-trigger sensitivity of the liberal media, big and small, to any and all things conservative during the Bush II years has been astounding to witness. It’s equally astounding to see how quickly things reverse when Democrats are involved.Now comes Geithner, nominated by Obama to head the Treasury Department, the largest part of which is the Internal Revenue Service. Evidence suggests Geithner is a tax cheat.
The core tax issue is his failure to pay Social Security and Medicare taxes for four years (2001 – 2004) when he was employed at the IMF, which did not withhold these taxes from his paycheck. The law says Geithner needed to pay those taxes himself, but he did not. He claims it was an oversight. Geithner’s failure to pay these taxes was eventually detected by the IRS, which in 2006 audited only two of the four tax years at issue (2003 and 2004) and required him to pay the back taxes he owed. Now comes the key point – if his failure to pay was an oversight, why didn't Geithner on his own go back and pay the taxes he failed to pay for years 2001 and 2002 after the IRS forced him to pay only for 2004 and 2005? Today's Wall Street Journal (link) suggests the answer: "Senate Finance aides said they were concerned either Mr. Geithner or his accountant used the IRS's statute of limitations to avoid further back-tax payments at the time of the audit." So here's a very credible theory, and the only one that explains the known facts -- the statute of limitations had run and the IRS could no longer force Geithner to pay the taxes he failed to pay for 2001 and 2002, so Geithner didn’t pay. He didn't pay, that is, until just weeks ago when Obama picked him for Treasury, 12 years after the IRS audit that discovered his tax problem.
Furthermore, now come reports (WSJ; Byron York in National Review) that the IMF not only clearly and repeatedly informs its American employees that they need to pay Social Security and Medicare taxes on their own, but the IMF pays those employees extra dollars for partial coverage of these taxes, which the employees are then supposed to pay to the IRS on their own. Reports are that Geithner took the employer money intended for his tax liabilities but nevertheless still didn’t pay the taxes. And this is the man Obama wants to head up the Internal Revenue Service. Geithner wants us to believe he is too obtuse to understand basic income tax requirements but still smart enough to manage our economy, the $700 billion Troubled Asset Relief Program, and, of course, the Internal Revenue Service.
Obama has called all of this an "innocent mistake" (link). The liberal media, when it is not dismissing this story outright, blows smoke in our eyes by conflating it with a far less significant nanny tax problem and with the deception that all these minor issues were resolved by Geithner long ago. Sometime Republican Lindsay Graham has of course rushed to Geithner's defense, and even some stalwart conservatives have fallen for the misdirection (link). No doubt that if the roles were reversed and Geithner was a Republican, it is unlikely that he would ever have been nominated, and if so, he would have been boiled in oil by now by Congressional Democrats and the liberal big media as just another example of the unethical, hypocritical, and lawless ways of Republicans.
The reality is that not only is Geithner’s past tax evasion shocking, but equally so is the dismissal of this as an issue by Democrat Obama and his team, their liberal media supporters, and some hoodwinked Republicans.
John M Greco
