After the Senate’s debate yesterday afternoon on the nomination of Timothy Geithner to be Secretary of the Treasury, ten Republicans voted to confirm Geithner. But only one of them, Sen. Orrin Hatch, spoke publicly on the floor in favor of the nomination. In contrast, all three Democrats who voted against Geithner — Byrd, Harkin and Feingold — took to the floor to explain their decisions. (Independent Bernie Sanders, who votes with the Democrats, did not.) Listening to their arguments, the common thread connecting Byrd, Harkin and Feingold is that they simply do not believe Geithner’s story that his non-payment of Social Security and Medicare taxes in 2001, 2002, 2003 and 2004 was an innocent mistake. Byrd put the word “mistake” in quotations. Harkin questioned how Geithner could have been repeatedly warned that he had to pay the taxes “and still somehow innocently overlook his obligation.” And Feingold said that a nominee who would oversee the Internal Revenue Service “must meet a higher standard than a failure to establish they deliberately evaded their tax liability.” Here are excerpts from their floor statements:
I believe Mr. Geithner when he expresses regret for his failure to pay these taxes, but that doesn’t explain why the failure happened. This embarrassing “mistake” occurred despite Mr. Geithner receiving annual and quarterly documents from the IMF and signing annual tax allowance requests that were supposed to serve as reminders about his tax obligations. He also failed to pay these taxes despite having accountants review his tax filings, and despite using software to prepare his tax returns. He only paid these taxes in full after being selected to be Treasury Secretary….Whatever his qualifications and talents for addressing the banking problems that are plaguing our economy, I cannot in good conscience vote to confirm this nomination.
He has stated this was an innocent mistake and that there was no intent to deliberately avoid paying the required taxes. However, the IMF informs us that in order to avoid exactly this kind of situation, its U.S. citizen employees are fully informed of their obligation to pay Social Security and Medicare taxes and must sign a form acknowledging that they understand this obligation.
Moreover, the IMF gives its U.S. citizen employees quarterly wage statements that detail their U.S. tax liabilities. The IMF pays its U.S. citizen employees an amount equal to the employer’s half of the payroll taxes with the expectation that the individual will use that money to pay the IRS.
So a serious question is raised as to how a person of Mr. Geithner’s financial sophistication could run the gauntlet of these many warnings and quarterly reminders and still somehow innocently overlook his obligation to pay these payroll taxes…Given this record of failing to pay taxes, if confirmed as Treasury Secretary, how could Mr. Geithner speak with any credibility or authority as the Nation’s chief tax enforcer? Would his admonition be: Do as I say, not as I do? That is not acceptable.
I am deeply troubled by his failure to pay the payroll taxes he owed, despite repeated alerts from his employer at the time, the International Monetary Fund, that he was responsible for paying those taxes. It is especially troubling because Mr. Geithner signed documents at the IMF promising to pay taxes, including the payroll taxes, in exchange for a special “gross-up” of his income intended to offset the cost of those taxes. Moreover, his earlier interactions with the Internal Revenue Service over his failure to pay sufficient payroll taxes for his household employees make Mr. Geithner’s explanations of his failure to pay his own payroll taxes even less satisfactory.
The failure to comply with our Nation’s tax laws would be problematic for any Cabinet nominee, but it is especially disturbing when it involves the individual who will be charged with overseeing the enforcement of our tax laws. Mr. President, surely that individual must meet a higher standard than a failure to establish they deliberately evaded their tax liability.