The Bill Comes Due

Shouldn't the man chosen to lead the U.S. Department of the Treasury know enough to pay his own taxes?

That's the question following Timothy Geithner around Washington like a stray hound dog.

Geithner, president of the Federal Reserve Bank of New York, is President-elect Barack Obama's pick to be treasury secretary, a key post at a time of unprecedented financial turmoil. Geithner neglected to pay $34,000 in Social Security and Medicare taxes while he was a senior official at the International Monetary Fund, a revelation that delayed his confirmation until after Obama's inauguration.

Geithner should have known that he owed the payroll taxes, and he should have paid them. The IMF regularly briefed its U.S. employees on their obligations. It would be a shame if Geithner's failure to pay the taxes until recently disqualifies him from an office for which he is otherwise superbly qualified. But ability to lead credibly is essential, and Geithner's political capital has been debited.

Geithner retains solid support in the Capitol, though, and his error is mitigated by several factors.

The New York Times reports that Geithner's mistake is common; employees for international organizations often neglect to remit payroll taxes.

The IMF doesn't split the Social Security and Medicare tax burden with its U.S. employees. Under the tax code, they are treated as self-employed workers and must pay all the taxes on their own. It also appears that Geithner may have gotten bum advice from an accountant who didn't believe he owed additional tax.

But there is also a chance that Geithner and his accountant believed they could use an IRS statute of limitations to run out the clock on some of the tax liability.

The Senate needs to ask Geithner tough questions when he faces the Finance Committee on Wednesday. If the committee believes Geithner meant to avoid the tax, he shouldn't be confirmed.

If he does become the next treasury secretary, perhaps Geithner will have more sympathy for the working stiffs who find themselves in similar straits, facing an impossibly complicated tax system that often shows little regard for common sense. We can hope.

REPRINTED FROM THE MILWAUKEE JOURNAL SENTINEL.

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