I've been reading thither and yon today on the Geithner mess. If you're not up to speed:
WASHINGTON — Timothy F. Geithner, President-elect Barack Obama's choice for Treasury secretary, failed to pay more than $34,000 in federal taxes over several years early this decade, and also faces questions about the employment papers of a former household employee, suddenly complicating what had seemed to be an easy confirmation process in the Senate.
It's sort of complicated. Geithner had worked for the IMF, which is an international entity that doesn't tax Americans in the traditional American way. I'll let the Times explain it, which it does pretty clearly in these grafs:
The I.M.F., as an international organization, does not withhold payroll taxes for Social Security and Medicare from its American employees' paychecks. Those workers are required to pay the roughly 15 percent tax themselves, as if they were self-employed.
However, the I.M.F. does pay its American workers an amount equal to an employer's half of the payroll taxes, with the expectation that they will use that to pay the I.R.S. The organization also gives them quarterly wage statements that include United States tax liabilities.
Mr. Geithner fully paid his state and federal income taxes. In failing to pay his payroll taxes, he in effect kept the money the I.M.F. had contributed toward his liability. However, Mr. Geithner's accountant told him he was exempt from self-employment taxes, according to Obama transition officials.
As Obama officials pointed out, and I.R.S. documents attest, the failure to pay Social Security and Medicare taxes is common among Americans who work for international organizations, including foreign embassies. A 2007 I.R.S. notice reported that up to half of such employees incorrectly file their tax returns.
Over on the teevee, they're saying that the fact that Geithner is up for secretary of the treasury (of all things!) makes this that much worse. But does it really?
First of all, it's pretty bad, for a treasury secretary or agriculture or any presidential appointee. But I'm not sure I see why his being the man for treasury makes it any worse. Yes, he will oversee the Internal Revenue Service. But if nearly 50% of people in this situation make this mistake, then there's probably something wrong with the instructions or something. It doesn't indicate to me that he's any less in command of fiscal and monetary policy, which is his job.
Of course, the logic being applied here can be supported sometimes. You wouldn't want to name someone to head interior who used to start forest fires for kicks. But that's a different question. Republicans, because they don't care about government and the functions of many of these agencies, do that sort of thing all the time -- putting corporate deregulators in charge of regulation. Geithner seems merely to have made an error of omission. Even so he deserves a black eye.
