Geithner hearing

Got Geithner’s hearing running on CSPAN on my computer. Only getting to hear bits and pieces as I come and go from my desk.

On general policy questions he is handling himself well - thoughtful, intelligent, don’t hear any answers that sound like political B.S. Sounds like the kind of guy Obama would want in this hyper-critical role.

But on the questions on not paying his self-employment taxes - he’s either stupid or thought he could get away with something. The answer he gives over and over is, yes Senator, had I looked at it closer I would have realized… and yes, Senator, I should have done this or that. He’s been questioned a couple of times on a form he filled out every year that is basically a form you fill out specifically if you’re getting money that is self employment categorized - I’ve filled similar forms out and I’m sure many here have. Other being paid by the same organization have stated it was impossible, due to the forms, what they tell you when you go to work for them, etc. to not know you had to pay self employment tax. Heck, my son worked for Flock doing tech support and testing and they didn’t tell him he had to pay self-employment tax but Turbo Tax + his tax forms made it clear he had to pay it. That, and the fact that it didn’t occur to him after his audit that “Oh crap, this audit was just for these two years, but I did the same thing on earlier returns!.”

He’ll still be comfirmed because he sounds like a pretty sharp guy (if you disregard him being a moron previously) and because Obama has lots of political capital right now. And perhaps this afternoon he’ll have better answers on the tax part (or he had better answers than the parts I heard - how quickly do the transcripts get posted? And is someone else watching this uninterrupted - if so, am I just missing his more reasonable responses?

I didn’t watch it, but a disturbing number of people I know through my extended friend network have messed up self-employment taxes in some way. No idea why; seems like a lot to be intentionally underpaying.

Being live-blogged by the WSJ here.

From my personal experience, it would be easy to not pay or underpay them intentionally, but hard to not know what you should pay, especially using something like TurbTax. When I helped my son put his taxes together, we were both surprised that he had to pay the self-employment taxes (as a college kid we just assumed he’d get all his with-held taxes back, but not so.) My understanding is that this is why you get the forms like Geithner got (and had to fill out and sign and send back in) acknowledging that you have an obligation to pay these self-employment taxes.

What I don’t like is Geithner’s answers rely on you assuming he is careless and dumb if you are to believe him. You got this form every year, it clearly states this and that, you sign it acknowledging what it says, how in the hell do you now say you didn’t know? Well, Senator, you’re correct, reading it now, I should have realized what I was signing, I just didn’t. Etc.

It’s ridiculous to think the error was intentional. He should have hired somebody to look over his taxes and catch this error though – he apparently did his own taxes? It is kinda strange that working for the IMF is considered being self employed.

Well, that’s kinda the issue. He is either lying and intentionally didn’t pay them, hoping that he’d never get caught and risking a lot for a little (and he was asked if it was a coincidence that he just started taking care of this after his nomination.) Or he is extremely careless and dumb on his personal financial matters. A number of people who work/worked for the IMF, including Democrats, said it was made very clear when you worked for the IMF that you had to pay self employment taxes when you filled out your forms when you were hired by them, plus you got the form you had to sign and fill out every year acknowledging that you knew that and were responsible to pay those extra taxes. C’mon, this high level financial wizard was unable to understand what every other IMF employee knew about his taxes, and didn’t really read the form he signed each year acknowledging that he knew it and was taking care of it?

No matter why he screwed up - it was a really, really stupid thing for him to do.

Yah, I can’t imagine what the thinking is here. We want a Secretary of the Treasury who can’t manage his own taxes? They shoulda cut this idiot loose right away.

Well, my shortcut is lots of people mess up their taxes, they don’t all seem dumb or criminals, so I’m guessing he’s not either.

Look, I want Obama’s choices in as quickly as possible and as smoothly as possible too. But c’mon. This guy is not your average joe working stocking boxes at Walmart. If anyone should be able to do his taxes at least as well as my 19 year old son, under identical circumstances, it’s him. (Even worse - for my son it was only one year, and he did not get a sign a letter from the company confirming that, yeah, I know I have to pay these self employment taxes, I’m signing it here -year after year after year after year.)

Your nineteen-year-old’s taxes take fifteen minutes of clicking through TurboTax. I’m betting on Geithner’s taxes being somewhat more complicated.

Maybe so, but Geithner is being sold as some sort of economic savant.

I mean, he’s got an impressive resume, no question. But we’ve just left eight years of incompetence, corruption and cronyism. Obama’s message was clear. “We’re not gonna be like those guys…change change change!” Geithner is either corrupt or he signs things without reading them. Honest mistake or not, not paying your taxes for four years should be an automatic disqualification from Cabinet-level positions.

I’d like to ask Geithner if he would hire someone for a lower-level position at the Treasury who hadn’t paid his taxes for four years? I sort of doubt it.

I don’t know, are you going to start inspecting his grocery receipts too, to see if he’s a smart shopper or not? People don’t always pay the same amount of attention to their personal life as they do to their work life, which is why we don’t normally take peoples’ personal lives for job qualifications.

It’s certainly possible that he was doing this on purpose but it seems like kind of a weakly obscured cheat and pretty risky. It seems more likely that he spared almost zero attention to the “hum drum paperwork”. I mean, I can spot some relatively obscure bug in a code review but I can barely remember to pay my credit card bill each month.

Yeah, while I tend to look at financial big wig guys with a skeptical eyes these days, my presupposition here is that he was just sloppy and dumb. I keep going back to the form he signed for four years running, the one page form that’s sole purpose is to remind you that you have to be responsible for paying your self employment tax, and his response of yeah, when you look at it, there’s no real excuse that I didn’t know. But if nothing else, I’d expect a guy at his level in the finance world to go for much bigger buck cheats if he was actually trying to be crooked.

Some guy somewhere makes it sound like a common error for IMF employees.

"“Mistakes happen,” he said “But not paying taxes? That is not common.” Spokesman for the IMF.

and “For one, there’s the IMF Employee Tax Manual given to new hires, which describes how to pay self-employment taxes. The IMF pays additional money to U.S. employees, on top of their regular salary, to offset self-employment taxes, and quarterly and year-end wage statements include the amount of self-employment taxes added to wage income. Lastly, IMF employees are required to annually file a form requesting the self-employment “gross ups” to wages.”

So, I would still expect the guy who is supposed to be enough of a financial wizard to lead us out of the economic morass we’re in and head the treasury to be able to read the instructions on how to pay his taxes and understand why he’s filling those forms out.

But it does sound like it is a little more complicated than standard self employment taxes.

Well, I wouldn’t. Filling out tax forms is for accountants, not economists. :)

They’re both number-men, right?

More fuel for the fire. James Fallows thinks he would vote for Geithner’s confirmation but is not buying his explanation at all:

The more I read about it, the harder it is to understand how he could have missed it.

Me too. I was even willing to give him the benefit of the doubt on the stuff Fallows describes until I read about his audit and that he didn’t pay taxes that were past the statute of limitations.

It’s disappointing, but I think Obama is entitled to choose his staff.

Frankly, most of all I kinda feel bad for Zoe Baird and Kimba Wood. I don’t know if it’s a double standard or a gender thing or just how Clinton handled things, or that we’re so much more enlightened now, but it sucks for them to have had their careers ended/derailed due to revelations that were much less serious than Geithner’s.