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More on Timothy Geithner's Tax "Fraud"
By Lars Toomre
Created Jan 15 2009 - 3:58pm
Earlier today and this week, Toomre Capital Markets LLC [1] ("TCM [2]") wrote about the possible willful failure of Treasury Secretary-nominee Timothy Geithner [3] to pay his social security taxes during the 2001-2004 period when he was employed at the International Monetary Fund [4]. Those posts were WSJ: IMF Informed Geithner on Taxes [5] and Timothy Geithner Has Some Past Tax Problems [5].
Reading further about this failure to pay taxes when due, TCM [2] has concluded that this possible willful failure to pay taxes is much worse than originally portrayed. According to The New York Times [6], "“Look, is this an embarrassment for him? Yes. He said so himself,” Mr. Obama said, referring to Mr. Geithner’s remarks in a private meeting with the Senate Finance Committee the day before. But Mr. Obama said Mr. Geithner had made a common mistake and corrected it."
Apparently, Timothy Geithner accepted payment from the IMF on an annual basis as restitution or a "true up" for social security taxes he was required to have, but had not, in fact, paid. Further, according to Byron York [7] of National Review [8], the IMF supposedly
took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. First, each employee was given the IMF Employee Tax Manual. Then, employees were given quarterly wage statements for the specific purpose of calculating taxes. Then, they were given year-end wage statements. And then, each IMF employee was required to file what was known as an Annual Tax Allowance Request. Geithner received all those documents.
The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.
At the end of the tax allowance form were the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.” Geithner signed the form. He accepted the allowance payment. He didn’t pay the tax. For several years in a row.
According to an analysis released by the Senate Finance Committee, Geithner “wrote contemporaneous checks to the IRS and the State of Maryland for estimated [income] tax payments” that jibed exactly with his IMF statements. But he didn’t write checks for the self-employment tax allowance. Then, according to the committee analysis, “he filled out, signed and submitted an annual tax allowance request worksheet with the IMF that states, ‘I wish to apply for tax allowance of U.S. Federal and State income taxes and the difference between the “self-employed” and “employed” obligation of the U.S. Social Security tax which I will pay on my Fund income.”
In a conversation today with sources on Capitol Hill who are familiar with the situation, I asked, “Was Geithner made whole for tax payments that he didn’t make?”
“Yes,” one source answered. “He was getting the money. He was being paid a tax allowance to pay him for tax payments that he should have made but had not.”
If this reporting turns out to be fact, there is no way Timothy Geithner, no matter how much he otherwise is qualified, should be confirmed as Treasury Secretary of the United States. One simply cannot have a tax fraud overseeing the Internal Revenue Service. What is even more troubling though is reporting that President-elect Barack Obama and his transition team have been aware of Geithner's tax issue since early November 2008. Yet, despite what clearly was not an "common mistake", President-elect Obama went forward with this nomination and continues to support Timothy Geithner's confirmation.
What does this say about the judgment and morality of the United States' in-coming President? Henceforth, will it be permissible for other "tax frauds" to be confirmed for leading governmental positions? The events of the coming week will say much about what is permissible for the country's leadership and whether the American electorate even cares whether their leaders lie, cheat and potentially defraud.
Toomre Capital Markets LLC [1] strongly hopes that some of our leaders will draw a line in the sand and hence prevent the successful confirmation of this nominee. A tax cheat simply cannot be allowed to oversee the IRS in our society of voluntary compliance. Leadership means holding oneself up for others to follow and aspire to. Do Americans really want to follow the leadership of a tax cheat???
Barack Obama International Monetary Fund IRS Timothy Geithner
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Source URL:
http://www.toomre.com/More_On_Geithner_Tax_Fraud
Links:
[1]
http://www.toomre.com/aboutTCM
[2] http://www.google.com/search?q="Toomre Capital Markets"&num=100
[3] http://www.google.com/news?q="Timothy Geithner"&num=100
[4] http://www.google.com/news?q="International Monetary Fund"&num=100
[5]
http://www.toomre.com/IMF_Informed_Geithner_On_Taxes
[6]
http://www.nytimes.com/2009/01/15/us/politics/15geithner.html
[7] http://www.google.com/news?q="Byron York"&num=100
[8]
http://article.nationalreview.com/?q=YzJjOGQyODY2ZjhhMWY4Y2U3YmVkMjhlMWQ2MWZiNTA=
KERIK EYES 'GEITHNER' TAX BREAK
Disgraced ex-top cop Bernard Kerik wants to be treated more like Timothy Geithner.
In new court papers, the former police commissioner complains that the feds want to send him to prison for the same sort of problems that officials overlooked in Geithner, whom the Senate confirmed yesterday as treasury secretary.
In an obvious reference to Geithner's tax troubles, Kerik's lawyers in White Plains federal court cited "recent events" showing that the vetting process for presidential appointees is "an imperfect one, during which mistakes and omissions occur."
While Geithner was allowed to pay his back taxes, Kerik was "treated differently" in his tax-fraud indictment, his lawyers charged.
Kerik also is charged with lying to the White House during his aborted nomination to head the Homeland Security Department.
http://www.nypost.com/seven/01272009/news/regionalnews/kerik_eyes_geithner_tax_break_152201.htm
Strike back at tax cheat Tim Geithner
By Michelle Malkin • February 8, 2009 11:25 PM
Are you up for a cathartic act of civil disobedience? DaveG at Where’s the Change? has a subversive plan. I like it:
I think it’s time for a comeback for civil disobedience. The only thing that angers me more than the rampant elitism and corruption in our government is that apparent tolerance for it that was demonstrated most recently with the appointment of what is almost certainly a tax cheat as the Treasury Secretary. Surely I am not alone in wondering why I am a big enough sap to pay tens of thousands of dollars in Federal taxes each and every year, while our Washington bureaucrats seem to get away consequence free with a pattern of cheating and fraud. And please, don’t tell me Tom Daschle didn’t get away with it. Sure, he lost his position for a cabinet position, but don’t you think he will be laughing all the way back to his millions-a-year “consulting” gig? Will he be prosecuted for his fraud like I would be? Did he pay any penalties? No, and no.
Since my single, solitary vote is nothing more that a BB in a machine gun world, I intend to start practicing civil disobedience. In the case of Treasury Secretary Geithner, I am going to have a rubber stamp made that says “Tax Cheat!” in block letters. Every time I see a piece of paper currency with Geithner’s signature on it, I am going to stamp over his name with my Tax Cheat stamp. Sure, this action is just as futile as my vote, but eventually maybe others will reach the same conclusion that I have: it is far past time to make our voices heard.
http://michellemalkin.com/2009/02/08/strike-back-at-tax-cheat-tim-geithner/
Liberals voice concerns about Obama
By CAROL E. LEE & NIA-MALIKA HENDERSON | 12/8/08 4:22 AM EST
Liberals are growing increasingly nervous – and some just flat-out angry – that President-elect Barack Obama seems to be stiffing them on Cabinet jobs and policy choices.
Obama has reversed pledges to immediately repeal tax cuts for the wealthy and take on Big Oil. He’s hedged his call for a quick drawdown in Iraq. And he’s stocking his White House with anything but stalwarts of the left. Now some are shedding a reluctance to puncture the liberal euphoria at being rid of President George W. Bush to say, in effect, that the new boss looks like the old boss.
“He has confirmed what our suspicions were by surrounding himself with a centrist to right cabinet. But we do hope that before it's all over we can get at least one authentic progressive appointment,” said Tim Carpenter, national director of the Progressive Democrats of America.
OpenLeft blogger Chris Bowers went so far as to issue this plaintive plea: “Isn't there ever a point when we can get an actual Democratic administration?”
Even supporters make clear they’re on the lookout for backsliding. “There’s a concern that he keep his basic promises and people are going to watch him,” said Roger Hickey, a co-founder of Campaign for America’s Future.
Obama insists he hasn’t abandoned the goals that made him feel to some like a liberal savior. But the left’s bill of particulars against Obama is long, and growing.
Obama drew rousing applause at campaign events when he vowed to tax the windfall profits of oil companies. As president-elect, Obama says he won’t enact the tax.
Obama’s pledge to repeal the Bush tax cuts and redistribute that money to the middle class made him a hero among Democrats who said the cuts favored the wealthy. But now he’s struck a more cautious stance on rolling back tax cuts for people making over $250,000 a year, signaling he’ll merely let them expire as scheduled at the end of 2010.
Obama’s post-election rhetoric on Iraq and choices for national security team have some liberal Democrats even more perplexed. As a candidate, Obama defined and separated himself from his challengers by highlighting his opposition to the war in Iraq from the start. He promised to begin to end the war on his first day in office.
Now Obama’s says that on his first day in office he will begin to “design a plan for a responsible drawdown,” as he told NBC’s “Meet the Press” Sunday. Obama has also filled his national security positions with supporters of the Iraq war: Sen. Hillary Clinton, who voted to authorize force in Iraq, as his secretary of state; and President George W. Bush’s defense secretary, Robert Gates, continuing in the same role.
The central premise of the left’s criticism is direct – don’t bite the hand that feeds, Mr. President-elect. The Internet that helped him so much during the election is lighting up with irritation and critiques.
“There don't seem to be any liberals in Obama's cabinet,” writes John Aravosis, the editor of Americablog.com. “What does all of this mean for Obama's policies, and just as important, Obama Supreme Court announcements?”
“Actually, it reminds me a bit of the campaign, at least the beginning and the middle, when the Obama campaign didn't seem particularly interested in reaching out to progressives,” Aravosis continues. “Once they realized that in order to win they needed to marshal everyone on their side, the reaching out began. I hope we're not seeing a similar ‘we can do it alone’ approach in the transition team.”
This isn’t the first liberal letdown over Obama, who promptly angered the left after winning the Democratic primary by announcing he backed a compromise that would allow warrantless wiretapping on U.S. soil to continue.
Now it’s Obama’s Cabinet moves that are drawing the most fire. It’s not just that he’s picked Clinton and Gates. It’s that liberal Democrats say they’re hard-pressed to find one of their own on Obama’s team so far – particularly on the economic side, where people like Tim Geithner and Lawrence Summers are hardly viewed as pro-labor.
“At his announcement of an economic team there was no secretary of labor. If you don’t think the labor secretary is on the same level as treasury secretary, that gives me pause,” said Jonathan Tasini, who runs the website workinglife.org. “The president-elect wouldn't be president-elect without labor."
During the campaign Obama gained labor support by saying he favored legislation that would make it easier for unions to form inside companies. The “card check” bill would get rid of a secret-ballot method of voting to form a union and replace it with a system that would require companies to recognize unions simply if a majority of workers signed cards saying they want one. Obama still supports that legislation, aides say – but union leaders are worried that he no longer talks it up much as president-elect.
“It's complicated,” said Tasini, who challenged Clinton for Senate in 2006. “On the one hand, the guy hasn't even taken office yet so it's a little hasty to be criticizing him. On the other hand, there is legitimate cause for concern. I think people are still waiting but there is some edginess about this.”
That’s a view that seems to have kept some progressive leaders holding their fire. There are signs of a struggle within the left wing of the Democratic Party about whether it’s just too soon to criticize Obama -- and if there’s really anything to complain about just yet.
Case in point: One of the Campaign for America’s Future blogs commented on Obama’s decision not to tax oil companies’ windfall profits saying, “Between this move and the move to wait to repeal the Bush tax cuts for the wealthy, it seems like the Obama team is buying into the right-wing frame that raising any taxes - even those on the richest citizens and wealthiest corporations - is bad for the economy.”
Yet Campaign for America’s Future will be join about 150 progressive organizations, economists and labor groups to release a statement Tuesday in support of a large economic stimulus package like the one Obama has proposed, said Hickey, a co-founder of the group.
“I’ve heard the most grousing about the windfall profits tax, but on the other hand, Obama has committed himself to a stimulus package that makes a down payment on energy efficiency and green jobs,” Hickey said. “The old argument was, here’s how we afford to make these investments – we tax the oil companies’ windfall profits. … The new argument is, in a bad economy that could get worse, we don’t.”
Obama is asking for patience – saying he’s only shifting his stance on some issues because circumstances are shifting.
Aides say he backed off the windfall profits tax because oil prices have
dropped below $80 a barrel. Obama also defended hedging on the Bush tax cuts.
“My economic team right now is examining, do we repeal that through legislation? Do we let it lapse so that, when the Bush tax cuts expire, they're not renewed when it comes to wealthiest Americans?” Obama said on “Meet the Press.” “We don't yet know what the best approach is going to be.”
On Iraq, he says he’s just trying to make sure any U.S. pullout doesn’t ignite “any resurgence of terrorism in Iraq that could threaten our interests.”
Obama has told his supporters to look beyond his appointments, that the change he promised will come from him and that when his administration comes together they will be happy.
“I think that when you ultimately look at what this advisory board looks like, you'll say this is a cross-section of opinion that in some ways reinforces conventional wisdom, in some ways breaks with orthodoxy in all sorts of way,” Obama recently said in response to questions about his appointments during a news conference on the economy.
The leaders of some liberal groups are willing to wait and see.
“He hasn’t had a first day in office,” said John Isaacs, the executive director for Council for Livable World. “To me it’s not as important as who’s there, than what kind of policies they carry out.”
“These aren’t out-and-out liberals on the national security team, but they may be successful implementers of what the Obama national security policy is,” Isaacs added. “We want to see what policies are carried forward, as opposed to appointments.”
Juan Cole, who runs a prominent anti-war blog called Informed Comment, said he worries Obama will get bad advice from Clinton on the Middle East, calling her too pro-Israel and “belligerent” toward Iran. “But overall, my estimation is that he has chosen competence over ideology, and I'm willing to cut him some slack,” Cole said.
Other voices of the left don’t like what they’re seeing so far and aren’t waiting for more before they speak up.
New York Times columnist Frank Rich warned that Obama’s economic team of Summers and Geithner reminded him of John F. Kennedy’s “best and the brightest” team, who blundered in Vietnam despite their blue-chip pedigrees.
David Corn, Washington bureau chief of the liberal magazine Mother Jones, wrote in Sunday’s Washington Post that he is “not yet reaching for a pitchfork.”
But the headline of his op-ed sums up his point about Obama’s Cabinet appointments so far: “This Wasn’t Quite the Change We Envisioned.”
