Wednesday, January 21, 2009

Tim Geithner, Makes Me Wonder

How can a guy who had the kind of experience and net worth that Mr. Geithner has, be using Turbo Tax to do his taxes? We're not talking about some guy who lives in a $200,000 house with his wife, 2 kids and a dog filing a plain vanilla tax return. This guy was short $34,000 in Social Security and Medicare withholding. $34,000 in withholding. $34,000. The median household income in this country is only little over $50,000. This guy failed to pay $34,000 in taxes. I've used Turbo Tax, its not hard to get right.

I am guessing that a guy with those kinds of resources (7 or 8 figure net worth) does not have a plain vanilla tax return. This is a man with vast experience in banking, wealth management and financial services. I guess I could buy where someone could forget to do that withholding, but I can't buy that he trusted his tax return to a piece of computer software. I have to wonder why he was being so cheap or perhaps it is something else. A good accountant couldn't have run him more than grand to do his taxes, which have to be far more than the basic tax returns ordinary Americans fill out every spring. Yet he resorts to a $75 piece of software to fill out the year’s most important paperwork. The wife and I make a nice living, but we still pay a couple hundred bucks for an accountant to do our taxes. I really have to question the wisdom of having a Secretary of the Treasury who does his taxes with Turbo Tax. In my eyes, he's either foolish, naive or just plain dumb at best. I don't think that those are qualities that I want to see in a person who is being elevated to the job of Secretary of the Treasury. At worst, he's a bold faced tax cheat. Either way, this is not the type of person you want to entrust with a job this important.

I have serious questions and issues with how Ben Bernake went about handing the bailouts and buyouts of Bear Stearns, AIG and others, but I never felt like the guy was foolish, naive or dumb. I question his judgment in giving out taxpayer dollars without getting something in return. However, I am not armed with all of the facts and my 6 credits of college economics only qualifies me to get up on my soap box and demand answers to questions which I think are common sense. In fact Tim Geithner was not far removed from many of those decisions Ben Bernake was making, in his role as head of the Federal Reserve Bank of New York.


Zebra said...

Good questions raised by your blog entry. It struck me as odd he used TurboTax when he testified.

My question for those who do use it is:

Doesn't TurboTax prompt you on the entries? Isn't there some "nag" feature to the software so they don't omit or overlook pertinent data?

There's more to the story. Question is whether whether anyone cares enough to ask them and get answers.

Excellent blog entry!

Yvette said...

What is scary to me is that he will be nominated. Their is no dissenting voice in DC right now. This man and his handlers have carte blanche to do whatever they want right now and the nomination of a man who broke our tax laws is no problem.

I did not vote for McCain or Obama. I am worried because Obama will not be challenged. We face an economic meltdown and I worry that such a crisis will allow the Obama team to take drastic action unopposed. He is JUST a man and as such he is just as capable as Bush to screw things up..... the only difference between the two is one was hated and everything he tried was fought over and resistance was organized and focused.

Today with Obama their is no organized resistance. What he wants he will probably get, call me a tinfoil hatter, but this kind of power in the hands of one man is of GREAT concern. He has the power and the support to reshape America in his vision, and the most worrisome part is his supporters will NOT question his agenda. The media is also in the tank for Obama.

anon said...

the real problem seems to be that, no matter what they find upon investigating these people, they always seem to get their job just the same. it seems that, no matter what party or what one has done, they almost literally have to have body parts falling out of their pockets on the interrogation stand in order to be denied office.

these hearings are just a show for us so that the politicians can be absolved, and allow them to pretend to do their job. can you think of anyone who should have been denied appointments who actually was during this process?

kankan said...

He did not pay the portion of FICA (social security) that an employer is bound by US law to pay. Usually you as an employee pay 7.5 percent on your wages and your employers pays 7.5 percent on your wages also. If you are self-employed you have to pay all 15 percent yourself.

His employer at the time, the IMF was a unique case. They had full-time US employees but did not withold any taxes of any type for the employees and also were apparently not bound to pay the 7.5percent of FICA that US employers pay. TG knew IMF was not witholding any of his income taxes so when filing his taxes, he paid his state and Fed income taxes and the normal employee portion of FICA but he apparently did not know that his employer was not paying the other part of his FICA (the other 7.5 percent)that he was suppose to pay that, essentially as if he was self-employed (which he wasn't)

So your line that "the Turbo Tax is easy thing, you shouldn't screw it up" does not apply here, his employer was a very strange exception to requirement to pay employers portion of FICA. TG did not dodge the normal taxes people pay.

And the $34000 he owed was apparently 3 years worth of the unpaid employer portion of FICA taxes, 7.5 percent of his wages. Meaning he was probably making well into six figures of wages form IMF. So the owing $34,000 over several years does not automatically make him wealthy in NYC (unless he had other sources of income), just makes him high-end professional.

If his financial life was as simple as being an employeee with a few standard deductions, I can see why he would just use Turbo Tax. Lots of decently smart people use Turbo Tax for much more complicated financial situations. Most high-level politicians (something TG was not at the time) don't do their own taxes, but frankly thats because lots of them are too stupid to even try Turbo Tax or they are so rich with income streams all over the place and with the need for deductions that they hire someone to do their taxes.

TG was not stupid to use TT, was not stupid in the mistake he made and was not apparently an intentional tax cheat.

Rather my problem with TG is this. While he did pay everything the IRS said he owed, he did not pay all his back taxes once he knew his mistake. The IRS told him he owed for 2003 and 2004. The IRS did not require money for his earlier years at IMF, due to statute of limitations, and TG did not pay for anything more than what the IRS requested.

It took very little time for Obama's minions to figure, "hey if IRS said he owed it for the those two years of his employment at IMF, why not for the other earlier years he was at the IMF?"

TG did not act in the prudent and vigilant manner commensurate to his career/position at the time. It was bad judgment for him not to pay all his back taxes once he was abundantly aware of the mistake he had made, even if the IRS was not requiring it.