On the Geithner Confirmation

I sent an email to Senator Bill Nelson asking him to vote against the Geithner nomination as Treasury Secretary. Of course, Nelson voted for the confirmation. Here is his response to my email:

Thank you for contacting me about the nomination of Timothy Geithner to serve as Treasury Secretary. I understand your concerns.

Mr. Geithner admitted an honest mistake on his taxes and the IRS agreed, choosing not to penalize him. Also, all taxes owed were paid with interest.

The Finance Committee took testimony from Mr. Geithner on January 21, and favorably reported his nomination. On January 26, I joined the majority of the Senate in confirming Mr. Geithner, and he was sworn in later that day.

Given what's at stake with our economy, it is vital that we have a Treasury Secretary who is ready to act. I appreciate hearing your opinion on this nomination. Please don't hesitate to contact me in the future.

My response to Senator Bill Nelson:

I realize that Mr. Geithner has been confirmed as Treasury Secretary so this is moot, but I had to make my opinion known.

I don't believe that Mr. Geithner made an honest mistake. I believe that it was calculated and intentionally done in order to evade paying taxes on income. If that is not the case, then Mr. Geithner was ignorant of the laws that he is now expected to know and enforce. I believe there is an old saying that covers this: ignorance of the law is no excuse.

I believe that the income in question was earned out of country. Did he make to determine if he was required to pay taxes on that income. I have seen no evidence that such inquiry was ever made. Perhaps it was and he was given incorrect information. I have not heard this was the case. All I know about the situation is that once his name was in consideration he suddenly realized that there were tax questions and he paid the taxes on the two years that were still owed. An honest man, making an honest mistake, should have not only admitted the mistake but made an effort to pay ALL taxes owed, not only those two years still owed.

Sorry Mr. Nelson, but I think you dropped the ball. It really doesn't matter how intelligent Geithner is or how well he will do as Secretary of the Treasury. The perception is that he is either less than honest, or is ignorant of tax laws. In either case, is he the right man for this position? Perception questions his honesty and integrity. All I can base an opinion of Mr. Geither on is what I know of him. And right now, I don't know whether he was honestly ignorant or honestly stupid.

You know, there is one way to avoid this situation in the future. Pass the Fair Tax. Tax is paid on consumption of products, not on wages earned.

Think about it. Too many members of Congress and in the national eye have been challenged on tax issues. Why don't we eliminate this problem, broaden the tax base, and get rid of a tax code that is impossible for any one to understand? Not even veteran IRS personnel understand the Code.

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I expected Nelson to vote in favor of confirmation. It was a forgone conclusion that Geithner would be confirmed. Nelson is a Democrat after all, and I suspect he votes as the Party expects him to vote, not necessarily in the best interests of the American people, or even in the best interests of his Florida constituents, but in the best interests of the Democratic Party.

Mr. Geither did not pay ALL taxes owed, he paid taxes and penalties only on the last two years. The statute of limitations had expired on the first two years, so Geithner wasn't required to pay on those. I suspect he wouldn't have settled any of his debt if his name hadn't been floated as a possible candidate for Treasury Secretary. He had a DOH! moment and remembered that income.

Mr. Geithner, to all reports, is well qualified for this position. I really don't know whether he is or not. As I wrote to Senator Nelson I can only form an opinion based on what I know:

• Mr. Geithner earned income and failed to pay taxes on it.
  
• He paid taxes and penalties on the two years still in contention AFTER he was in consideration for Treasury Secretary.
  
• There are other allegations that Geithner attempted to evade taxes, but I won't go into those, as I don't have sufficient information on them.
  

Mr. Geithner is supposed to be an expert on the economy. How can an expert on the economy fail to pay taxes on income? If he didn't know whether or not he should pay taxes on that income, shouldn't he have researched it or, I don't know, ask someone?

As I have stated many times, perception is everything. I don't know what was going through Mr. Geithner's mind, whether he questioned anyone about paying those taxes, whether he deliberately chose not to pay the taxes, or honestly thought he didn't have to pay taxes. My perception is that he should have known, or at the very least, made inquiries sometime within the time period he earned income overseas. So, my perception is, at best, he made a stupid mistake, or at worst, that he perpetrated a criminal offense. In either case he got away with it - being stupidly ignorant or a crime that would land most other people in Federal Court.

How many more high profile people are going to end up on the front pages because of tax issues? How many more Senate nominates (not to mention sitting Senate and House members) are going to withdraw their names from consideration because of tax issues? As I wrote to Senator Nelson, there is a way to avoid this mess: pass the Fair Tax.

No one would be able to avoid paying taxes. Everyone would pay taxes, and pay the same rate. There would be no more DOH! moments.

What could be more fair?