The treasury sec nominee looks like a questionable pick by Obama right now with the tax issue.
Fits right in with the current situation.
The lack of confidence in leadership continues unabated.
The take from the Big Picture>
The Gartman letter wrote:
“ON THE POLITICAL FRONT, and to be
listed under the heading “You Really Cannot Make
This Stuff Up,” Obama’s nominee for the Treasury
Secretary’s Position… the position in government that
follows, in our opinion, just behind that of the Sec’y of
State,… Mr. Tim Geithner has created a very real
problem for President-elect Obama, for it appears that
he did not pay self-employment taxes that were owned
to the IRS for the years 2001-2004 when he was an
employee of the IMF. Apparently then, the IMF treated
all employees as “contractors,” and did not withhold
taxes. Geithner was responsible for his quarterly taxes
AND for self-employment withholding, which he
apparently failed to pay. He paid the taxes, but only on
the years ’03-’04, for which the statute of limitations
had not yet expired, and he paid them in late
November when it was clear that he might well be up
for a Cabinet position.
We shall not argue that the taxes in question were
sophisticated, and we shall not argue that the taxes he
had not paid were easily missed, and we shall not even
argue with the fact that Mr. Geithner paid the taxes as
late as he had and that he probably would not have
paid them at all had Obama not won and had he not
had some assurance he’d be a Cabinet rank official;
however, not paying the same taxes for ’01 and ’02
because the statute had run out is inexcusable.
Further, as we understand tax law, there is no statute
of limitations upon the non-payment of taxes due,
although perhaps there is some exemption that the
IMF was able to include in previous tax laws protecting
their “employees” from litigation. We shall leave this all
to the tax lawyers, spin doctors and Obama
Administration offices to wade through. All we know, or
think we know is that Mr. Geithner’s problems will
make those of Judge Kimba Wood and of Ms. Zoe
Baird of 16 years ago regarding payrolls taxes and
illegal household help seem really quite tame. Colour
Geithner gone! As they say, “Stick a fork in’im; he’s
done.” Obama has to be livid… and horrifyingly
embarrassed.”
We will not quibble with Dennis Gartman’s criticism. We agree with it. Dennis correctly asks if there is going to be a lesser standard for the Treasury Secretary than there is and was for federal judges.
Our postscript is to emphasize that in the post-Lehman, post-Madoff, post-SEC failure, post financial crisis period, confidence and transparency are now the two most important elements for the United States. Geithner would serve the new president and country best if he admitted error and immediately paid anything this is owed or suspect. Come clean and clear the air. If he does, the new leadership will be setting the standard for the new post-Madoff era. If he doesn’t, President-elect Obama must remove his nominee from consideration. Otherwise Obama’s “Audacity of Hope” will become dashed and replaced with despair. The world’s eyes are witching this one closely.
ritholtz.com |
