Daschle Owed $101,943 in Taxes
A second Obama cabinet nominee is having tax troubles, Jake Tapper and Jonathan Karl report.
ABC News has learned that the nomination of former Senator Majority Leader Tom Daschle, D-S.D., to be President Obama’s secretary of health and human services has hit a traffic snarl on its way through the Senate Finance Committee. The controversy deals with a car and driver lent to Daschle by a wealthy Democratic friend — a chauffeur service the former senator used for years without declaring it on his taxes.
It remains an open question as to whether this is a “speed bump,” as a Democratic Senate ally of Daschle put it, or something more damaging.
After being defeated in his 2004 re-election campaign to the Senate, Daschle in 2005 became a consultant and chairman of the executive advisory board at InterMedia Advisors. Based in New York City, InterMedia Advisors is a private equity firm founded in part by longtime Daschle friend and Democratic fundraiser Leo Hindery, the former president of the YES network (the New York Yankees’ and New Jersey Devils’ cable television channel).
That same year he began his professional relationship with InterMedia, Daschle began using the services of Hindery’s car and driver. The Cadillac and driver were never part of Daschle’s official compensation package at InterMedia, but Mr. Daschle — who as Senate majority leader enjoyed the use of a car and driver at taxpayer expense — didn’t declare their services on his income taxes, as tax laws require.
During the vetting process to become HHS secretary, Daschle corrected the tax violation, voluntarily paying $101,943 in back taxes plus interest, working with his accountant to amend his tax returns for 2005 through 2007. (Daschle reimbursed the IRS $31,462 in taxes and interest for tax year 2005; $35,546 for 2006; and $34,935 for 2007, a Daschle spokesperson said, adding that Daschle had asked his accountant to look into the tax implications of the car and driver five months before Obama won the presidency.)
[…]
In a speech to his fellow Republican House members, Rep. Eric Cantor, R-Va., compared Daschle’s issue with the tax problems that hindered the confirmation of Treasury Secretary Timothy Geithner and those of Rep. Charles Rangel, D-N.Y., who is embroiled in a controversy over payment of taxes on a beachfront villa in the Dominican Republic. “A pattern is developing,” Cantor said. “The pattern is solidified. … It’s easy for the other side to sit here and advocate higher taxes because — you know what? — they don’t pay them.”
While a funny line, it’s at least plausible to me that Daschle didn’t realize he owed taxes for this. After all, he’d been chauffeured around for so long that he likely just thought all senior executives get that treatment. Moreover, if it wasn’t part of his compensation package and just done as a courtesy, it’s quite probable that he didn’t consider this to be income and it’s unlikely for his accountant to have asked about it.
A later Tapper report, however, is more problematic:
Mr. Daschle also didn’t report $83,333 in consulting income in 2007.
The Senate Finance Committee Report also notes that during the vetting process, President Obama’s Transition Team “identified certain donations that did not qualify as charitable deductions because they were not paid to qualifying organizations. Daschle adjusted his contribution deductions on his amended returns for 2005, 2006 and 2007 to remove these amounts and add additional contributions.” This adjustment meant a reduction in the amount he contributed to charitable foundations of $14,963 from 2005 through 2007.
These two omissions are much harder to dismiss. Indeed, they look like actual tax fraud — an attempt to conceal a substantial amount of obvious income and to claim deductions to which he wasn’t entitled and which his accountant could easily have verified. He’ll need a humdinger of an explanation.
Commenter markm sent me an email on this last night but by the time I got to it the story was all over memeorandum. The commentary has thus far been exclusively from the right and, from a sampling, it appears none too favorable.
- Ed Morrissey notes that the optics aren’t great either, snarking, “How many Americans make so much money that they could forget about $83,000 of it in a year?”
- TigerHawk offers an amusing moral hierarchy of tax evasion, including a compelling spouse nagging discount multiplier that makes avoiding nanny taxes more forgivable than avoiding chauffeuring taxes.
- Neptunus Lex observes that, “I have to say this whole business of powerful figures being chastened to pay back taxes prior to their cabinet confirmations . . . is more than a little off-putting. After all, these men are from the same party earnestly abjuring us that the wealthy must pay more to pay their fair share (even though the top 5% already pay 60% of the total income tax burden).” He adds, “The same ones who want to tax us stiffed us, at least until it stood in the way of their political ambitions.”
Unlike Timothy Geithner, who was confirmed as Treasury Secretary despite failure to pay self-employment taxes which he owed even though he wasn’t self-employed thanks to a quirk in the tax code, it’s going to be hard to argue that Daschle is “indispensable.” But, as a former Senator — and leader in the Senate — he’s got an inside track at a pass on this. The real question isn’t whether the failure to pay taxes here is forgivable but rather how well liked he was by former colleagues.
UPDATE: Hillary Bok (aka Hilzoy), writing from the Left, is pretty harsh, too.
I don’t understand why people in public life don’t just recognize that they should report anything that might even conceivably count as income, and do things right the first time.
[…]
Part of what bothers me about this is the sense of entitlement: the sense that having a car and driver is just one of those ordinary things that happen to a person, not worth noticing or thinking of as compensation or a gift.
[…]
I also have to ask: didn’t this come up during the vetting? If not, why not? And if it did, what’s up with that?
If mainstream Democrats are having that sort of reaction, Daschle’s done.
Photo: Chicago Limousine Service
I think the problem I see here is that while democrats want to raise taxes for the rich, it appears rich democrats aren’t paying them anyway. And they are getting away with it-the IRS didn’t audit Geithner or Daschle, an accountant caught the errors.
I would say these are all points in favor of a flat tax, but then the taxes Daschle didn’t pay essentially involved hiding income-if you are hiding income, whether it is flat or progressive doesn’t really matter.
In all seriousness I’m curious about what people on both sides of the aisle think should be normative. Is it okay to be, at the very least, casual about paying taxes? Why?
Look, we can’t maintain a modern society without a government. If you think government is optional, look at Somalia. And you can’t run a modern government without substantial tax revenues.
So, what kind of a society should we have and how do we get there from here? What we’re doing now rather obviously isn’t working very well. There are too many of these incidents coming up for them to be incidental.
I’m just curious as to how this came to be given the hype about Team Obama’s extensive background questionnaire for all prospective appointees. Wasn’t all those intrusive questions supposed to weed out these potentially embarrassing issues before they nominated the guy (or gal)?
@Dave:
I think it just shows how messed up the tax code is, Dave. And I agree with James:
I’ve come around to the idea of a much simplified tax code, maybe three brackets, a standard deduction, and no others. Taxes are the price we pay for a civilized society, but the way we assess and collect them now seems medieval to me. Medieval in the sense of the Ptolemaic astronomy: A tax code with epicycles on epicycles on epicyles. We need a Copernican revolution in our thinking about taxes at the national level.
Guess they forgot to ask questions like “did you pay your taxes?”
Dave-do you think part of the problem is the tax code is too complicated? I sometimes think that is part of the problem, but then the kinds of things Daschle and Geithner forgot to claim would still be required even under a simpler tax code-they just flat out didn’t claim the income-either deliberately (not sure though how Daschle forgot the speaking fees income) or without realizing they should have paid it.
Maybe part of the problem is in how the IRS audits and chooses to audit.
But it is hard for the democrats to take the high road on the whole-tax the rich thing, when their rich aren’t paying taxes anyway or at least they aren’t paying all of them.
Sam I am all for a simplified tax code, but in the case of Daschle he didn’t claim the income-a simplified tax code wouldn’t have made him claim the driving service or his speaking fees.
I’m curious about the charitable donations to non-qualifying organizations. The most plausible explanation is that he made donations to a public interest that seemed charitable, but doesn’t qualify because it lobbies.
I need to know more about the consulting fees-it could be a big problem, the rest is defensible I guess. OTOH I do not understand how Rangel is still in the House- of the three- he is by far the most
inexcusable.
These are the prospects that pass the vetting process!
How much fun would it be to hear about the peccadillos of the rejects!??![lol]
I do think the system needs to be simplified tremendously. There shouldn’t be taxes that aren’t obvious that are nonetheless owed.
Failing to declare large amounts of income that’s obviously income, though, is obviously unacceptable.
This is pretty bad news. I’m an unabashed Democrat & inclined to carry water for the president, but this is probably a dealbreaker.
On the upside, maybe he’ll resign, and another Clinton-era relic can be replaced.
This doesn’t even pass the giggle test. Daschle was first elected to the House in 1978. He was on the Finance Committee in the Senate, for pete’s sake. This isn’t Joe Sixpack being caught by regulations he couldn’t reasonably be expected to be aware of; this is a man who spent 26 years voting on those regulations. While on the Finance Committee, he (at least symbolically) co-wrote them. He submitted bills on AMT, gift tax, estate tax, generation-skipping tax – all of which are at least as arcane as the requirement to declare the transfer of a service.
I don’t claim to know his mental state; but if he didn’t know better, he certainly should have.
We used to have a much simpler tax system. That was more than 25 years ago and over time it’s grown in complexity to the point where it’s incomprehensible to anybody.
IMO the reform that’s needed isn’t just simplification. We need to sunset the tax code and make it non-renewable. It should be re-written from scratch every few years. The incentives for increasing complexity are just too high. They’re not escapeable. If we hypothetically passed the simplest possible income tax next year, within ten years it would be as bad as the system we’ve got now.
That would take a constitutional amendment so we can confidently predict that it won’t happen.
Do you really think that the United States and Somalia are comparable in that regard? We accept that many countries are not prepared for a liberal democracy. Why do you assume that all countries would behave equally with an anarchy?
In the end, that such questions were not asked tells me that the answers really don’t matter to this administration. I could not come to that conclusion if this was the only example. Clearly, however, it is not.
At some point along this line, we have to admit to ourselves that this is more than just bad optics, this is outright criminality, and a pattern of it a to the Obama administration. Maybe at the end of the day it’s time to admit to ourselves that the business surrounding Blagojevich was trying to tell us something.
Kind of funny…after Geithner was given the go ahead, Sen. Byrd said “Had he not been nominated for Treasury Secretary, it’s doubtful that he would have ever paid these taxes”. IMO I believe Daschle wouldn’t have paid either. I think…or hope…that Daschle doesn’t pass the “indispensable†test.
Dave I think you make a good point about the tax code growing in complexity-although I am not so sure complexity is going to be a believable excuse for Daschle-at least with regards to the income related to his consultations.
I think the idea of ditching the tax code and rewriting it every X many years may be a good one, but it will never happen.
Since I defended Geithner on another thread here (I think) I guess I should comment on Daschle. Daschle’s mistakes are, based on what I’ve read, much less defensible than Geithner’s. Geithner didn’t have any unreported income, and the bulk of his unpaid taxes came from a situation where the IRS felt the need to do a formal settlement initiative.
Daschle, OTOH, somehow managed to use a company car for personal use for ~3 years and think nothing of it, plus failed to report consulting fees. Also, the “interest” he’s paid seems way low, considering the amount of back taxes he owes. So, I would say, this is a much more legitimate issue for Daschle than for Geithner.
I think the idea of ditching the tax code and rewriting it every X many years may be a good one, but it will never happen.
Well, even if it did, what keeps them from copying last year’s tax code? Hell, the constitution specifically requires that money for the army can’t be appropriated for more than 2 years, yet when was the last time we didn’t have one?
Look, I’m a card carrying liberal here, but I don’t like this trend I am seeing in these appointments. If you can’t manage your own finances then I’m not sure you should be running the government. Even worse, its becoming apparent that both sides of the isle are full of elitists who really really REALLY believe that they are entitled to positions of power and free passes because they are members of the upper class. This is wrong, and all of us who voted for change need to demand better. I like some of the steps I’ve seen so far, but people who think they are entitled will keep all progress in having a real democracy from every occurring
Even worse, its becoming apparent that both sides of the isle are full of elitists who really really REALLY believe that they are entitled to positions of power and free passes because they are members of the upper class.
So what member of the GOP hasn’t paid his taxes? Last time I checked there is a pretty long line of non tax paying democrats-that whole “Taxes are for the little people” thing at work.
I can actually see Geithner’s excuse, but Daschle and Rangle?
There has to be at least the illusion of permanence in the tax code. If Congress were unable to pass a revenue act prior to the expiry of the prior one, interest on the debt would be at risk of going unpaid. This would drive up the interest rate on new debt issuance, possibly substantially. The dollar would take a bath.
Another damn liberal, bites the dust!
http://docweasel.wordpress.com/2009/01/31/6867/ Can we prosecute the Democrats under the RICO Act yet? « docweaselblog (NSFW) replied:
[…] Can we prosecute the Democrats under the RICO Act yet? By docweasel I’d say this month, between all the criminals in the new Obama Admin, Geither, Holder’s malfeasance, the mayor of Baltimore, Blagovich, and now Daschle, the Democrat party seems like a corrupt organization set up to commit fraud and other crimes. […]
Well, if you want an analogue to Geithner, there’s OK House Speaker Lance Cargill, who has a 6-year string of late property tax payments.
More like Daschle is Republican Congressional candidate Marty Ozinga (IL), who only recently paid “most” of over $59,000 in back taxes owed over the last 20 years.
I don’t think this issue is peculiar to one party or the other. I think it’s a general air of scofflawry, perhaps due to a sense of entitlement, thinking that laws are just for the little people.
Scott Ott explains all.
I’ll admit to being inconsistent about this. I was annoyed by the Geithner thing, but thought maybe it was a common mistake for IMF employees. This Daschle thing makes it two too many for me. He should be withdrawn from consideration.
I agree with bithead. Two nominees having deficiencies in paying back taxes is unheard-of corruption clearly orchestrated by Obama. This is vastly worse than, say, the 32 criminally convicted officials of the Reagan administration.
Yeah, clearly another criminal Democratic administration. Republicans never have these problems–they only like to break other, less significant laws, like torturing, outing CIA agents, and obstructing Special Prosector investigations (to name a few).
Bitsy, I think the gravitas in your words is more than a little overly dramatic. I think it quite a stretch to think that, oh, boy, the whole Obama administration is criminal. That’s more of a wish by you and your Redstate Strike Force buddies than the reality actually bears out. Funny how you always see a criminal pattern after one or two instances of a Dem doing something, but you act completely dumbfounded and have no idea where the rest of us are coming from when an actual pattern exists when your guy is in the dock. (See above for examples of pattern).
Nonetheless, I agree that this is a problem for Daschle and think he should be prosecuted if criminal blah blah blah. I mean, why can’t we just agree that law-breaking, rich guy politicians (because they are almost always rich guys, right?) should be disqualified or prosecuted (if warranted criminally) without taking partisan sides? Isn’t that a no-brainer?
Caught these comments earlier today that supposedly came from the transition team, but I don’t remember where I saw it.
While working there, Daschle was paid on a 1099 form, rather than a w-2. The consulting fees in question were actually salary which was not included on the 1099 form – one month salary. Since his employer was also supplying the car, it also should have been included on a 1099, but wasn’t. My guess is the IRS is going to be going over the former employer’s books with a fine tooth comb.
Until I read that post today, I was not aware that charities had to be listed & that a canceled check to the charity is not considered proof by the IRS; they also require a receipt. I have never used my charitable giving as a tax deduction. However, most of my charitable giving has been to individuals or organizations who are not registered with the IRS.
The tax code is over complicated. To his credit, Daschle had his taxes audited on his own beforehand, w/o prompting from the IRS or, evidently, from the transition team. Can’t say that about Geithner, since it was the transition team that had him go back & pay the 2 years’ taxes that had gone past the statute of limitations.
I’m willing to cut them both a little slack, but I agree it does not look good. However, last I knew IRS records are considered confidential info. Bith these guys turned over the records without being legally required to do so.
Bob I am not cutting Daschle much slack-how do you miss that much income in a year? We usually have last years tax records, out and open when doing this years. I would think somebody would have noticed almost 100k difference in salary even if they are filthy rich.
Makes me wonder about Obama’s vetting process and why he thought two candidates with tax problems should be able to fly through confirmation. Granted in the end maybe he will get Daschle in his post too, but I don’t think for a minute that a republican president would get one tax cheat much less two confirmed and that’s one of the things that burns me up about this one. A GOP nominee would have had the media all over the story to the point that the president would withdraw the nomination-I don’t see anything close to that kind of pressure from the media.
Well, you certainly never made that admission about the Bush administration. Where was your outrage over billions of dollars in taxpayer money being flown into Iraq and simply vanishing?
You reaction is no surprise. The Clinton’s swipe an ashtray and you go ballistic. The GOP engages in unprecedented corruption and the silence is deafening.
Just Me – this goes beyond party. I believe in the principles of the democrats, but both parties are drunk with power and its because they know 99% of the time they will get away with it. Weather is Tom Daschles taxes, Duke Cunninghams taking 2 million in bribes, Ted Stevens taking illegal “gifts”, or JOHN BOEHNER PASSING OUT LOBBYIST CHECKS ON THE HOUSE FLOOR – its the same thing. I give Boehner the all caps because is is the minority leader, and he got away with it.
So, Just Me – for the good of the country don’t politicize this, otherwise we will never get to fixing it.
Your Clintonesque “They do it too” defense noted, and laughingly rejected.
Perhaps pointing at some actual criminality within the Bush administration would be helpful. Of course, that would mean you actually have some. Since you didn’t offer any, one can only assume you have none to point to.
And yet your ire doesn’t seem to include the money being dumped into the ‘bailout’ and vanishing… money the size of which dwarfs the entire cost of the Iraq war. I find your annoyence amusingly targeted.
It’s an ugly moment for a guy who’s been working very hard on the policy front. Frankly, he should have removed himself from consideration. It looks terrible.
Having said that, you have to give people a break – and I’d give the same break to a Republican (committing a *comparable* error).
Taxes are hard. I actually made a very similar mistake to Geithner’s myself a few years ago. It’s confusing that you have to pay taxes on self-employment income twice, and in my case no one explained it to me. Most people don’t sit down and read the tax code from top to bottom to gain an overall knowledge. So far, these have been errors of omission and ignorance, rather than positive acts of falsification or evasion.
And contra Bithead, it’s not as if these people failed to pay any taxes. They paid all kinds of taxes. I’m sure Daschle paid tens of thousands of dollars in taxes. He just forgot to pay taxes on a particular perk.
Having said that, it was stupid and i suppose it’s possible that he thought about it and didn’t bother to do it anyway, but considering what the guy should know about being in the public eye by now, that would be gobsmackingly shortsighted.
So, my “Bush did it too” defense in defense of your “Clinton did it too” defense is indefensible, huh? Yeah, I’m such a hypocrite.
See, this is exactly the head-buried-in-the-sand thinking that gets you into trouble all the time, Bitsy. As you have liked to say in many other threads before when you can’t come up with an adequate defense and pass on addressing the argument at hand, there is ample evidence freely and widely available on the Internet for you to Google about Bush admin Republican criminality. Why, I just linked to one such site recently–which topic, of course, you failed to address when it was fatal for your argument.
Say, isn’t this an “Obama did it too” defense? (Because I know you’re going to lay the bailout mess at his feet, even though it occurred on Bush’s shift with Bush’s Treasury Secretary. But that won’t stop you from blaming Obama, will it?)
Oh, one more thing:
Most estimates have the financial cost of the Iraq War somewhere around 600 billion dollars. While the bailout is more than that (trillion and a half, etc), It hardly “dwarfs” the cost of the war. And of course, when you factor in having lost our moral standing, diplomatic power, and all that other stuff, the “cost” of the Iraq War may be as significant as the economic bailout.
I am not talking about money actually spent on the Iraq war, I am talking about billions of dollars in cash vanishing into think air. No one know where it went. I think “stolen” is the correct term.
As for the bailout, are you referring to the Bush bailout? You know, the one where no one knows how the money was spent?
Well, we could start with Scooter Libby.
It is also noteworthy that Daschel is not, as we speak, part of the Obama administration, and there was no such administration when the tax issues in question took place. It also appears that Daschel was not forthcoming during the vetting process.
Really bit, try a little harder…
BTW, I am not giving Daschel a pass. Based on what I know at this point, he should withdraw himself from consideration. Howard Dean would do quite well in that position…
-Bob Dole
Howard Dean ?? With his temperament, we should save him for a position as a diplomat or to run a day care center![lol] Or maybe just a job as a counter person at the DMV, yeah, that would be perfect!![lol]
Damn Floyd, you are right. Dean’s a joke. After all, when he became head of the DNC, the Republicans contolled the White House, Congress and The Senate. And when he left, the Democrats contolled the White House, Congress and The Senate.
Oh, wait a sec….
Of all the things posted here on this thread, from interesting to ridiculous, the theme I don’t understand is giving Daschle a pass because the tax code is complex. (And Gueitner too.)
Of course it is complex, too complex. But we all know the reasons for that.
That said, and perhaps I’ve missed a nuance, but I haven’t seen one issue either of them faced that was particularly esoteric. I meet with my accountant 2-3 times a year to discuss issues and set appropriate quarterly estimates. I’ve dealt with a number of things these guys did. Its not terribly complex, and a reasonably experienced accountant will competently advise. Are we to believe these guys are amazingly talented public servants worthy of our trust……, um,except for these narrow issues?
Which leads me to the only, IMHO, reasonable conclusion. They got caught with their hands in the cookie jar………..and people want to give them – as politicos – a break the Everyday Joe doesn’t get. Privileges of royalty, you know.
Same as it ever was.
See what I mean?
Oh, I’ll grant there are years of talking points offered by leftists that such things exist. But actaul criminality seems to elude them. About the best you got was Scooter Libby, as I recall.. and that was to say the least questionable.
Nor Geithner in the same situation. Still, these two are hardly unique among Democrats anymore.
And Chuck; Careful.. Remember what happened to Trent Lott when he said nice and polite things about another Senator.
It’s called a smoke screen, Drew.
So is this the best you can do in terms of walking back your claim of a pattern of “outright criminality” in the Obama administration?
Where is your outrage over Bob Ney? Guess its only wrong to be wrong if you are a Democrat. A senior Bush administration official is convicted for acts committed during his tenure, and you make excuses. News flash, that is “criminality”.
Hardly walking it back. It’s called ‘estalishing a pattern of behavior’.
Daschle says Taxes Are For The Little People to pay.
He sure is big on death tax for the rest of us and he sure should go to jail.
Ah so. The way you kept you head in the sand in the face of year after year of GOP corruption?