TimmyG and the Fed

We tax all the others and pass the revenue on to you

Kent Hoover in the Baltimore Business Journal ... Sen. Kent Conrad, D-N.C., said he found Geithner’s failure to pay taxes “completely unacceptable,” and would lead him to vote against his nomination “in normal times.” “These are not normal times,” Conrad said. “I personally don’t think we can afford a further delay in filling this critically important position.”

If there's a fire, just throw ANY liquid on it. You just might help. Might not, though.

(Same link)... A different perspective on TimmyG's qualifications to shepherd us through our financial crisis ... As president of the Federal Reserve Bank of New York, Geithner “sat idly by as devastating risk became more and more concentrated in a handful of few large financial institutions.”

Bungled taxes and ignored the gathering financial storm ... and he's our new SecTreas? We have NO ONE better than that? What on earth did we do to deserve this, giving Tim the admin of our tril in bailouts plus the next tril in new bailouts? It's only money, but it's our money.

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Rep. Charles Rangel (D-NY), how have I missed you so far? From Bloomberg, Charlie on taxes ... “From the tax point of view I think we’ve done a great job” in reference to a recent tax $275B tax cut ... and "Rangel said he will pursue tax reform only after overhauling the health-care system and said “there’s no question” both can be completed by the end of 2010." Or maybe never.

Charlie has some problems that he'd like you to ignore ... Here's Thomas Lifson in American Thinker last September, citing a NYTimes story ... Charles Rangel, a man who writes federal tax laws as head of the House Ways and Means Committee, not only failed to pay taxes on income he received from a luxury resort property he owns, he financed the purchase with an interest-free loan from a campaign backer who is also a politically active lawyer.

And there's still the matter of all those rent-control apartment problems. OK, the NYPost is a tabloid, but here's summary of a story they ran last Nov. ... Harlem Rep. Charles Rangel took a "homestead" tax break on a Washington, DC, house for years while simultaneously occupying multiple rent-stabilized apartments in New York City, possibly violating laws and regulations in both cases. Charlie and TimmyG seem to have similar aversions to paying the same taxes they a) administer, and b) saddle us with.

Makes TimmyG sitting idly by seem almost benign, doesn't it? Almost, but isn't that exactly how we got where we are now, sitting idly by? C'mon, if YOU knew that "negative amortization" and "zero down" home loans were bad ideas, why didn't TimmyG and all the others -- including and especially our most recent past president and his team -- know? Truth is, they did. Are we STILL going to sit idly by? Are you willing to make up for what congressmen and political appointees won't pay?

Can't anyone here play this game? -- Casey Stengel

Caroline, Say It Ain't So

We tax all the others and pass the revenue on to you

Doesn't anyone inside the Beltway pay their fair share. You know, what our VP called "patriotic", the amount of tax that we actually owe.

From NY Times via MSNBC: "Problems involving taxes and a household employee surfaced during the vetting of Caroline Kennedy and derailed her candidacy for the Senate." Sigh.

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From an editorial on amarillo.com: "Timothy Geithner, President Obama's choice to be the nation's Treasury secretary, is either crooked or is shockingly inattentive to details such as ... paying taxes.

Let's give the man the benefit of the doubt, that his failure to pay employment taxes was a simple mistake, an oversight, and that he isn't a crook." ... and ... "This stumble ought to remind Americans of when, in 1987, President Reagan appointed Federal Judge Douglas Ginsburg to the U.S. Supreme Court, only to learn that Ginsburg has smoked some marijuana while he was in college. Ginsburg withdrew his nomination immediately, saying he lacked the moral authority to serve on the nation's highest court."

Has anyone asked TimmyG if he ever smoked any dope? Bet I know the answer, but moral authority is already off this table. But hey, he apologized to congress. Wouldn't you? You go, Tim.

And say, Tim? It's not TurboTax's fault either. But you already said that, while hinting that... just maybe...

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In Lithuania they're responding to the financial crisis by lowering salaries, raising taxes on whatever's left and reducing tax incentives. They're following the formula of taxing more and more on less and less ... until, presumably, they'll tax 100% of nothing. Not particular well thought out, Vilnius. God forbid that they might actually encourage business investments so as to actually create some of those yummy taxable salaries.

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Taxes. As Casey Stengel famously said: Can't anyone here play this game?

Z-Bux Redux

We tax all the others and pass the revenue on to you

OFF TOPIC: Keep your eye on Zimbabwe for how bad economic collapse can get. Not for us. Our bad times are gravy trains for a lot of the world. Other countries, though, are getting a glimpse of what happens when no one has a hand on the wheel. Zimbabwe has tanked from a healthy, self-sufficient exporter to a failed state in the course of one man's 29-year rule. It's not the only failed state but it is the one with the most recent healthy economy.

THEN... pay attention to Russia and see if you can find any similarities. One-man rule, obscured by rigged elections, comes to mind, as does an extraction economy untempered by environmental concerns, armed -- and largely un-reported-on -- insurrections, blame always directed outward, never inward.

The latest mid-day, Chechnya-related murders of a civil rights lawyer and an accompanying journalist in downtown Moscow were caught on video. Round up the usual suspects. Here's a text mesage the lawyer received a few days before his murder: "You brainless animal, you are again involved in the Budanov case? Idiot, couldn't you find a calmer way of killing yourself?"

There is a modern reign of terror in Russia. You only know a few of the big-name victims: Politovskaya, Litvinenko, Yushchenko, now Markelov and Baburova. It's not on the sweeping scale of 1937's "The Terror" but it doesn't have to be to get the same results.

From Zimbabwe via MSNBC, this chilling on-point comment: "Any government who goes out and assaults its own citizens, its own people, has lost completely any kind of legitimacy," she said. They understand in Zimbabwe. They understand in Russa, too, and their advocates are dying brutal deaths.

NOW do you see any similarities? When the Zimbabwe economy collapsed we didn't notice. If -- some say when -- the Russian economy collapses we will.

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TimmyG will be our SecTreas, count on it. He apologized, after all, and that oughta be enough for congress. Now Tim says that the bailout "needs serious reform". Isn't that the buyout that congress just passed and doled out? No political elitist worth his salt ever started a new job without promising to right the wrongs of his predecessor. But the current congress of his own party, not to mention his own party's transition team (and where was he?), is neck-deep in this. Can we expect any more from this guy than "It's not my fault, man, and neither were those darn taxes." Poor us.

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From US News & World Report: According to the report, "International Taxation: Large U.S. Corporations and Federal Contractors With Subsidiaries in Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions," 83 of the largest publicly traded companies were in such locations in 2007, and 74 of those companies had federal contracts that ranged from $12,000 to over $23 billion.

Hey! Hey TIM! Here's an idea: If they do business here, if they get US government subsidies, if they make their money off of US... they ought to contribute a FULL TAX SHARE!!! There's a change I could believe in.

Inauguration Day In Tbilisi

OFF TOPIC: I'm in Tbilisi again for a month, working for an EU project. Thus I spent Inauguration Evening (morning in the US) with good Georgian friends watching the events on CNN. All of us were fascinated by the manifestation of freedom in America.

Congratulations, Mr. Obama. In your first few hours you said the right things, outlined substantive goals and challenged us all to step up for America. You looked good, you sounded good (some peculiar CNN criticisms to the contrary) and you gave us all motivation and confidence.

I fielded some interesting questions and heard a bunch of interesting remarks. It occurs to me that there isn't a general understanding of our Republican-Democrat divide and how it differs from the concept of "opposition party". I admit the difference may be subtle. Bush Derangement Syndrome suggests that difference may no longer even exist. Opposing points of view are necessary to a free people. I hope we can overcome the cynical view that only one party knows how best to govern and get past the days when diatribe replaced discussion.

Here in Georgia even the most astute observers wonder: after elections do Americans really come together, work together in support of their leaders no matter their party? I explained that yes, we do. I hope I live that assurance. Political differences and slights are not always and not easily put aside but we believe they must be for America to persevere. We strive for a joining of hands in common purpose, working together to further not only our interests but for what we perceive as the interests of both our allies as well as those who are not allied with us.

"Freedom isn't free" is one of my favorite mantras. It's not well understood either. In the FSU (and likely elsewhere but I'm not so widely traveled) one of the most common anti-reform assertions you here is that "the people of (insert country name) are not yet ready for freedom but we (leaders du jour) are leading them in that direction." But there is no such thing as a "national version" of freedom. Others may not define your freedom! That's what freedom is all about. There is only... freedom. The PEOPLE aren't ready to be free but somehow WE are? Those are the words of despots, not free men. To illustrate, the citizens of Russia know they are not free but Mr. Putin says they are redefining freedom in the Russian way. They're not, he is, and their freedom isn't free.

Start with free speech, a free press and free elections. The rest will follow. Yes, we can.

TimmyG - As The Story Unfolds

We tax all the others and pass the revenue on to you

LA Times columnist David Lazarus spins the Tim Geithner saga as the result of a "broken tax code", not TimmyG's fault at all. I'm feeling better already. I gather from Lazarus that in California nothing is anybody's fault. That might create self-esteem issues. No, find something else to hang the rap on is the name of that game. "I'm just here for the credit, not to answer for the consequences of my acts." It's the tax code, stupid. Only it isn't.

Let's review: If you work for the IMF you get to declare as "self-employed", IRC definitions to the contrary. (At IMF, are there no working hours? But I digress.) IMF is a special place for very special people to hang out. Just ask them.

Self-employeds file IRS Schedule C to determine whether they made a taxable profit after deducting all business-related expenses, a profit that they report on Line 31 as "Net profit or (loss)". The on-page instructions (i.e, it's not some kind of secret tax trap) for Line 31 begin with "If a profit, enter on both Form 1040, line 12, and Schedule SE..." (my italics). You have to look at that line if you're doing your own taxes, as did TimmyG. Yet... nothing. For four years running, nothing.

The tax code is pretty screwed up but it didn't trip up TimmyG and it's not the issue. He cheated, got caught TWICE (IRS and Obama vetting team) and paid up. End of story for most of us, no big deal, skipped SE tax is all, ponied up $43 large. But this man is probably going to be the top guy at US Treasury. That IS a big deal. Will we soon define Obama's Treasury Dept. as the fiefdom of a tax cheat? Looks like it from here.

In case you're wondering, I really want Obama to succeed. He's the best we've got. We need immensely talented and driven people to lead us out of the mess we're in and we don't offer them half the salaries some of them could command elsewhere. We really need them. BUT... it's an affront to America to propose a tax cheat to lead us out of our financial wilderness.

TimmyG exemplifies the attitude of DC elites toward the rest of us. He IS the wilderness. Want to know why TimmyG did his own taxes? Maybe because no reputable tax pro would sit still for that kind of nonsense and he couldn't live "No, Tim, you can't do it that way, you really do have to pay."

Leona Helmsly famously announced "Only the little people pay taxes". The difference is, no one proposed her for SecTreas. Poor us. Would we have Bernie Madoff lead us out of the SEC debacle? No? Then why TimmyG? He is a known quantity and I don't like what I know.

Me, I propose whoever did TimmyG's vetting as our new SecTreas. S/He has knowledge, courage and credibility. Exactly what we're going to need from our next SecTreas. See the difference?

You Don't Have to Make This Stuff Up

TaxProfBlog summarizes a story from webCPA:

An IRS (employee) has sued the IRS for firing her after she insisted on wearing a ceremonial knife on the job.

The agent (name omitted here) filed suit against the IRS for discharging her in July 2006. She is a religious Sikh who wears a knife known as a kirpan. The blunt knife is kept in a curved sheath at her side. (She) initially began wearing a 9-inch knife when she was formally initiated into the Sikh faith in April 2005. The religion requires adherents to wear five sacred articles of clothing.

After her supervisor objected, she switched it for a 6-inch kirpan with a blunt 3-inch blade. According to her lawsuit, the blade never set off the metal detectors in the Leland Building in Houston, and was not able to inflict bodily harm. However, her supervisor pointed out that federal law prohibits people from carrying blades longer than 2.5 inches in government buildings.

"She was always able to go through the metal detector, and it never beeped," said Harsimran Kaur, legal director of the Sikh Coalition, which is helping represent (her). ... (She) refused to bring an even shorter knife with her to work, however. "It is a signifier of justice and it reminds the Sikh in particular to protect the weak," said Kaur.

After the disagreement with her supervisor, (she) was permitted to work from home for nine months, but when her supervisor ordered her back to work with a shorter blade, she brought the same kirpan with her. Security officers barred her from the building, and she was fired shortly thereafter.

No, really, you're gonna pay more tax

We tax all the others and pass the revenue on to you

NYTimes columnist Bob Hebert is someone to whom I do not turn for solutions to much of anything. However, he promotes a very good idea today, citing economist Dean Baker: A tax, 1/4 of 1%, on stock transactions. I have never fancied myself as, or wanted to be, a tax policy wonk. I'm just a humble country tax collector. Or was, now a humble tax reform consultant. But this one has a lot of surface appeal. It raises revenue from those who play the market as if it were roulette without the zeroes and it doesn't tax those who don't. It raises the cost of pensions that invest in the market (wouldn't that be nearly 100% of pension plans?) but pension plan admin fees are far above that already, making the tax rather trivial. So trivial, in fact, that if this tax is enacted -- and really, by now surely you understand that someone is going to pay for this mess -- then an increase in the tax will surely follow soon.

TCFR raise tax revenue. Get over it. This one has TCFR's "tax everyone but me" broad appeal: Lots of revenue -- maybe $100B annually -- and little effect on Joe Sixpack. Soak the rich and try not to notice that it is a regressive (OMG!) tax that applies at the same rate to taxpayers regardless of income level. Not unlike, say, sales, auto and property taxes. Works for me. How about you?

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Ooops. I say, OOOOPS! Is Tim Geithner going to be a key international player as SecTreas or just the answer to a trivia question: Who was Obama's original pick as SecTreas?

Nancy Killefer's nannytax problems are merely illustrative of the bi-partisan embarrassments that trip up political appointees. And some perspective is called for. She got caught not paying some chump change taxes on her housekeeper or some such. She "cleared up" the problem somehow, and it's over. Fine, it should be.

Tim Geithner, now that's a different kettle of tax. TimmyG got paid X while working for the IMF in NYC, plus Y to pay his taxes. Yes, working for IMF/Work Bank/UN IS a sweet deal but that's a different story. Believe me, everyone there knows that A) their salaries are taxable in their residence jurisdictions, and B) that they are all but untraceable if you don't pay voluntarily. So TimmyG doesn't bother to declare or pay, the IRS audits for 2003 and 2004 and nails him for $17K. End of story? No way. Obama vetting team auditors (and good for them!) notice that he worked for IMF in 2001 and 2002 and didn't pay taxes on that salary either. Four years running and he thinks his salary isn't taxable? And that his tax make-up money is what, a bonus?

OK, now he's paid up -- $43,200 -- but what does that say about him? It's not a nannytax omission, it's four years of not paying tax on your salary and keeping the extra money you were given specifically to pay your taxes. It at least met the minimums for a referral to IRS Criminal Investigations unit in that it was a) substantial understatement, and B) a continuing pattern. Don't look for the referral to happen any time soon. Meanwhile, all he's asking is a chance to steward a coupla tril of your stimulus/bailout money. You can trust him with that, can't you? Oh, and don't get distracted by his legal-then illegal-then legal again housekeeper or her predecessors. That's just the way they do it in DC and NYC, where the laws don't apply to the lawmakers. It's a non-issue unless you care about character, but who does that any more?

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You didn't miss the Kansas City Chiefs (American pro football, but just barely) story, did you? $25M in state tax credits to help fund the Chiefs move to a new training facility. Maybe, just maybe the 2006 "award" of $50M to renovate the Chiefs and Royals (baseball) stadiums was justifiable. After all, there were no protest riots.

But $25M in state tax credits? What good are they and what are the Chiefs going to do with them? Why, of course: They're going to sell them to someone else! For $10M!!! Poor Kansas taxpayers. Poor Kansas students, too, as they're going to have to pay a "university fee" to help build the Chief's new training facility (Do you see any connection there?) AND "local officials" are going to have to pony up the rest of the $13.5M for the new facility. Have to?

I don't care what anyone legally does with their own money. I might not like it but the law's the law. But shouldn't the public draw a line somewhere when government is spending their tax (and student) money to facilitate things like pro sports? Where's the urgency? Where are the priorities?

All that happened last weekend. Their new governor has already said, in essence, that it's past history and something that he's not going to look at. Technically, last weekend is history, but so is five minutes ago. Sometimes it's hard to tell the difference between robbery and tax policy.

If there is an economic crisis that requires massive amounts of public money for bailouts and stimuli, then shouldn't there be some oversight about where it's going? There hasn't been so far and no sign of that improving on Mr. Obama's watch.

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The Chiefs and Mr. Geithner have at least one thing in common: Neither wants to pay the freight for their lifestyle choices, even when there is lots of money to do so. That tapping sound is Marie Antoinette clapping a fan into her gloved hand.