What’s A little Tax Evasion Between Friends?

There seem to be two emerging story-lines on Tom Daschle‘s tax evasion.

One: So are they all, all honorable men
This argument holds that yes, his “tax problems” are serious, definitely worthy of condemnation but, hey, he disclosed everything voluntarily (which is a really hilarious word under the circumstances, isn’t it?), he has sworn, just like Tim Geithner did, that it was all unintentional, and he has apologized handsomely, just like Tim Geithner did. So he should be confirmed, just like Tim Geithner was.

Two: That’s what friends are for
In a different vein, commentators are arguing that yes, he fudged his taxes, but that won’t really be held against him, because what’s a little tax evasion between friends? Specifically, Daschle is very popular in the Senate, he still has lots of friends there, and so his nomination will sail through, tax evasion be damned.

Politico spells it out:

With President Obama and Senate Democrats rallying behind Tom Daschle after Friday’s revelations of back tax troubles, Republican senators faced a difficult choice—whether to support the Cabinet nomination of a former member of their exclusive club, or strike a clean shot at the new Democratic president.

“If this were anyone else, I don’t think there would be any question that [the nomination] would not make it out of the committee,” said a top Senate GOP aide, referring to Daschle’s 18 years of Senate service, including stints as both majority and minority leader. “But he’s a former majority leader, which means a lot to these guys.”

And here’s Dick Durbin, baldly stating that what the facts warrant and what you would do if you know Tom Daschle are equal and opposite actions:

“If all you knew about Tom Daschle was that he used to be a senator and he made a mistake and had to pay over $100,000 in back taxes, you would have a right to be skeptical, even cynical,” said Sen. Richard J. Durbin (Ill.). “But if you know Tom Daschle, you know better.”

Meanwhile, Republican leaders are not showing much interest in making an issue of it:

The Senate’s leading Republican said he is taking a wait-and-see attitude toward the revelation that former Senator Tom Daschle – named to a cabinet post by President Obama – recently filed an amended tax return and paid $140,000 in back taxes and interest.

Appearing on CBS‘ Face The Nation, Sen. Mitch McConnell, R-Ky., refused to say whether he thinks Daschle’s nomination as Secretary of Health and Human Services is in trouble…”

“The Senate Finance Committee is meeting tomorrow to go over this and to come up with recommendations for the rest of us,” he told host Bob Schieffer. “And I think I’m going to just wait until they give me their opinion.”

So it looks like one of the visible manifestations of change in the Obama administration will be the presence of two admitted tax evaders in the cabinet.

*** Update, 9:05 a.m. ***

Ezra Klein, a strong supporter of Daschle’s nomination, argues in his defense:

I’m not convinced that Tom Daschle’s future is substantially imperiled by his shoddy tax returns. Nor am I convinced that it should be. Few actually believe that Daschle meant to cheat the government out of a $100,000 in tax revenue at the cost of his future political viability.
[...]
The tax problems appear to be a legitimate mistake.

Apparently, Ezra Klein finds the following narrative convincing:
— In June 2008, it suddenly strikes Daschle, out of the blue, and for the very first time, that if you receive a car and driver from a friend who you happen to work for, maybe you are required to pay taxes on it.
— He has his accountant look into it. The accountant confirms that, sure enough, Daschle owes more than $100,00 in taxes for the tax years 2005 through 2007.
— And so, because Daschle is so honest, and has every intention of paying up in full, he tells his accountant not to do anything about it.
— Then he suddenly pays up the taxes on January 2, 2009, well into the vetting process for his cabinet nomination.

The story Daschle is telling with a straight face is that his accountant decided to “fix” the situation “as part of Daschle’s 2008 filing”.

Of course, this makes no sense at all. The problem has nothing to do with his 2008 return. There is no earthly reason why they should wait till the 2008 return is filed. No tax accountant worth the name should advise this.

Which is why Daschle’s behavior invites the suspicion that he would probably not have paid these taxes had he not been nominated for a cabinet position. There is nothing in Daschle’s behavior or statements that refutes this suspicion. And, frankly, people who evade taxes for years, and then suddenly set things to rights once they are nominated for a cabinet position deserve to be treated with a certain amount of healthy skepticism.

*** Update #2, 9:12 a.m. ***

I just want to clarify that last paragraph. What I’m suggesting is that Daschle had decided (just like Geithner) to sit tight and do nothing unless he was audited, or the issue otherwise came up publicly. And whenever it did, the plan was to smoothly declare that he had realized this himself just a few months ago, and had already instructed his tax accountant to rectify everything when he filed his next tax return.

*** Update #3, 3:44 p.m. ***

I stand corrected. I was under the mistaken impression that Daschle had heard back from his accountant soon after referring the matter to him in June 2008. That, apparently, is not correct. Which is to say, it’s not what Daschle and his accountant are now saying.

In June of 2008, Daschle was at a cocktail party when the subject of cars and driving came up. During the course of this conversation, an acquaintance mentioned the tax consequences of accepting a car and driver and that it had to be treated as income. That notion planted in Daschle’s mind, he called his accountant the next day and asked the accountant to figure out whether he had to pay taxes on the car.

Daschle and his accountant forgot about this issue until December, when they were in the process of tabulating his new tax burden arising from the charitable contribution mistake and an additional $83,000 that Intermedia forgot to put on his bill to the IRS.

The political question is why, during this period from December 15 or so through January 4, did Daschle NOT inform the transition team about the car issue?
[...]
White House aides say that they knew about everything BUT the car-and-driver until Jan. 4.

There is also another question (a non-political one?): why did Daschle forget about this matter till December? That, fortunately, is a question that Daschle has answered, through a HHS spokesman, Jenny Backus:

But it was not until late December or early January, after the accountant came back to Mr. Daschle with a report on the back taxes owed, that the former senator informed the White House transition team. Ms. Backus said Mr. Daschle did not think to mention it earlier, in part because “he thought his accountant was taking care of it,” and in part because he had no idea the amount owed would be so high.

Tom Daschle thought his accountant was taking care of it how? By doing nothing, evidently.

And how exactly does it matter how high the amount was, if his accountant was already taking care of it?

Shouldn’t he at least make the effort to lie to us more smoothly if he wants to pull the wool over our eyes? This lackadaisical effort is just insulting.

Comments

  1. ew says:

    So basically he is in. How many more??? Would not be a bit suprised to find out half of our sitting gov. officials have made “mistakes”. What a crock.
    Just think if we collected all of the taxes probably not paid by all government in every state (cause you know there are more of you) this country might be sitting pretty well off.

    So far haven’t seen any change Mr. President. You should be condeming this NOW!!!!!!

  2. Sheldon says:

    If he’s the great stand up guy they all say he is, he’d step aside and not get in the way of the Presidents plans and embarass the President. Obama is the loser on this one. Daschle made others step aside when he was a honcho. Do as I say…….

  3. sarabeth says:

    Obama, though, is showing no signs of being embarrassed. Not by Geithner, not by Daschle.

  4. cottonwood dan says:

    I think we need a Special Prosecutor, don’t you? The tax issue is only the tip of the iceberg. But, then, he is not a “conservative” Republican. Not to worry, though – Obama will take care of everything.

  5. sarabeth says:

    The tax issue is only the tip of the iceberg.

    ???

  6. MICHELLE says:

    If I forget or miss to report anything on my taxes I would have the IRS crawling over me. I just don’t buy the ‘unintentionally’ or ‘I forgot’, these people have experts doing their taxes and all them should have known better. Everyone I talk to is absolutely outraged about this. What bothers me most, is that someone like Geithner is now is now Treasury Secretary- what kind of logic is this? and so far no reaction from Obama.

  7. Duck says:

    I put my taxes together and worry about whether I have the receipt for a medical parking fee of four bucks. This guy forgoes in excess of a hundred thousand dollars in tax payments …. is that how he lived his life? Just don’t bother .. or look the other way .. or consider himself to be above the law. Each and every example of this sort should cause outrage .. and be cause to keep such folk from public office!

  8. Jerome Barry says:

    The Democrat’s majority in the Senate is beyond reproach. Reprehensible behavior, such as would be the confirmation of a powerful tax cheat, is reproachable, but the Democrats have Moved On from that.

  9. trp says:

    Didn’t we convict Al Capone for tax evasion? Now we’re appointing people to cabinet positions and attorney general who have committed the same offense. This administration is off to a good start!!!

  10. sarabeth says:

    The Democrat’s majority in the Senate is beyond reproach. Reprehensible behavior, such as would be the confirmation of a powerful tax cheat, is reproachable, but the Democrats have Moved On from that.

    The piece that passeth all understanding.

    Now we’re appointing people to cabinet positions and attorney general who have committed the same offense.

    Why let facts get in the way?

  11. Micalee says:

    So have none of you ever fudged your taxes? I know I have, and I’m betting we all have. That’s partly why we hire tax accountants to help us: to get the maximum breaks possible – which is sometimes “playing” with the numbers.

    The cumulative amount looks daunting for Daschle, but how much he paid overall I’m sure dwarfs that amount. I don’t think it’s that big of a deal, and I think people need to stop expecting politicians to be super-human morally pristine people. He didn’t molest any children or hurt any one. Where’s the crime?

    Seriously. Is everyone here SO honest that they can say they never withheld information on their taxes?

  12. sarabeth says:

    I’m really curious: what other crimes, short of child molestation and causing grievous bodily harm, should we condone in our politicians (all politicians, right, not just cabinet members)?

    Perjury? (So have none of you ever stretched the truth? I know I have.)

    Theft? (Come on, you never took pens home from work?)

    Embezzlement? (Is everyone here SO honest that they can say they never fudged an expense statement?)

    Sexual harassment? (Never flirted with an office colleague?)

    The possibilities are endless, aren’t they?

  13. john ebbers says:

    This is silly. Guys who have unpaid taxes of 100k certainly have the funds to get their accountants/lawyers to justify or eliminate it. He’s just being arrogant, and got dinged for it. Yet more “change we can believe in”! And speaking of backroom dealing……..
    Democrat Speaker of the House Nancy Pelosi’s home district includes San Francisco.
    Star-Kist Tuna’s headquarters are in San Francisco, Pelosi’s home district.
    Star-Kist is owned by Del Monte Foods and is a major contributor to Pelosi.
    Star-Kist is the major employer in American Samoa employing 75% of the Samoan work force.

    Paul Pelosi, Nancy’s husband, owns $17 million dollars of Star-Kist stock.

    In January, 2007 when the minimum wage was increased from $5.15 to $7.25, Pelosi had American Samoa exempted from the increase so Del Monte would not have to pay the higher wage. This would make Del Monte products less expensive than their competition’s.

    When the huge bailout bill was passed, Pelosi added an earmark to the final bill adding $33 million dollars for an ‘economic development credit in American Samoa’.

    Pelosi has called the Bush Administration “CORRUPT” ? ?

    How do you spell “HYPOCRISY” ?

  14. jim says:

    So if you are a demacrat its ok to cheat lie and steal. I see now why obama got his house so cheap. I will not vote demacrat again.

  15. eightrak says:

    If the average american “made a mistake” on their taxes they would be pursued by the IRS until they die or pay. If you are a member of congress or a state senator, you can get away with not paying your taxes,…until your caught. I can’t express enough the outrage I feel over all these corrupt politicians doing things that would land you or I in prison! as for Obama, he should not give any of these crooked career politicians any positions when these types of “problems” arise. This administration has already shown that It will not operate any differently than any before it. “Life, Liberty, and Justice for those who can afford it”. If we were truly a nation of laws half the crooks in DC would be incarcerated.

  16. JV says:

    john ebbers: nope.

    Although nice copy and paste job.

    The Daschle thing is troubling, to say the least.

  17. Eightrak wrote: “If we were truly a nation of laws half the crooks in DC would be incarcerated.”

    You should have used ‘politicians’ in place of the word ‘crooks’.

    Big Business and Politicians should be forced to SHARE THE PAIN with the rest of us in these times.

    Otis