Nanny Taxes and Bong Hits

In defense of Tom Daschle, and Tim Geithner, and Nancy Killefer, and Linda Chavez, and...


As the Michael Phelps mini-scandal of 2009 has demonstrated, the American people can be hypocritical jerks sometimes. They scarf down precious Matt Lauer-narrated human interest stories about how celebrities, politicians, and white sports heroes are just like us! But when Phelps hits the bong at a kegger, the nation is aghast to discover he is a totally normal person in non-chlorinated environments.

Likewise with the multitude of tax scandals now engulfing several of President Barack Obama's appointees. More Americans probably cheat on their taxes than smoke pot. And a lot of Americans smoke pot. (Look away IRS. You and your 67,024+ pages of U.S. tax code have already audited me once.) Even those who don't mean to cheat on their taxes will probably do so accidentally, unless they confine their daily activities to (a) going to a salaried job and (b) rushing home to sit perfectly still lest they earn and/or dispense freelance or self-employment income or incur any deductible expenses by, say, giving to charity or getting sick. Needless to say, this does not describe the lives of the best and brightest in government.

Yet the nation goes into paroxysms of horror when potential political appointees screw the pooch on their tax returns. The surest way to making a tax error—thus precipitating a graceful but heartbreaking withdrawal from consideration for high office—is to hire someone to take care of your children while you work extremely hard, perhaps for the U.S. government. Ideally, you will select a skilled and caring person who happens to inhabit the lowest rung of the American class system, an illegal immigrant. You will give her a chance to establish an income, credit, and possibly a path to citizenship. You will accept her into your home, make her part of your family, and pay her a fair wage for her labors. She, in turn, will probably pay taxes on her income. But you, as an employer, might forget/purposely neglect to pay an additional payroll tax on her salary.

Should you be tapped for higher office, this is a brilliant path to shame and ruin for you, your family, your party, your president, and yes, your nanny. Yet for all of your peers, it is simply normal conduct. There are about 70 million kids and 1.3 million childcare workers in the United States. While most of those people aren't full-timers, nannies can be as common as Baby Einstein DVDs among a certain set—and you'd better believe payroll taxes aren't getting paid, recorded, or otherwise properly parsed in an awful lot of houses.

The story of Obama's would-be chief performance officer Nancy Killefer is a tidy case. The woman failed to make quarterly unemployment tax payments to the District of Columbia for a year and a half. She fixed her mistake in 2005 after the D.C. government put a lien on her house for a whopping $298 dollars in taxes owed on the salaries paid to her nannies and assistant, but the city added $48.69 in interest and $600 in penalties. I only wish my tax mistakes were as low as $298. She literally and figuratively paid her debt to society years ago. But no matter, she's out of the running. (A horrible irony: Her previous job has been as the chief financial officer and chief operating officer at the Treasury Department, where she worked on a major project to modernize the IRS.)

Being in possession of two X chromosomes seems to make nanny problems worse, though the rule is far from absolute. Not one, but two Clinton nominees for attorney general of the lady persuasion were deep-sixed by the undertaxed nanny gambit. The nanny and chauffeur combo brought down judicial hottie and "very sexual woman" Kimba M. Wood. The same dragon reared its ugly head and got Zoe Baird, too. (Meanwhile, this nanny is left unmolested in her State Department appointment as a public diplomatic envoy. Is there no justice in the world?)

Linda Chavez, Bush's pick for Secretary of Labor, wound up as the star player in a too-good-to-be-true illegal employee story: Chavez was the first Hispanic nominee to a cabinet position, and she was caught employing an illegal Guatemalan immigrant off the books. Or so the headlines screamed. Later, it emerged that Chavez had never employed the Guatemalan woman in question, but had instead given her money and helped her escape domestic abuse. Never mind, she was out, too.

Who is the big winner in the tax evasion sweepstakes? Confirmed Treasury Secretary Tim Geithner. What does Geithner have that all these other guys and gals don't? After all, in addition to failing to pay $34,023 in self-employment tax from 2001 to 2004, he has had his share of household staff tax screw-ups: According to the Associated Press, he "filed the taxes late for his household employees in 1996 for years 1993 to 1995; he incorrectly calculated Medicare taxes for his household employees in 1998 and received an IRS notice; and he received notices from the Social Security Administration and the IRS after not filing 2003 and 2004 forms for his household employees." He also has an undocumented housekeeper for a few months in 2005. But he's in!

And now, as Tom Daschle and his hedge-funded untaxed chauffeur get out of Dodge, tax return tucked between his legs, it's easy to wonder if it was the ridiculous Libeskindian glasses that did him in. They're just so darned expensive-looking. If it's to be class war, fine. Go after people with nannies and chauffeurs and assistants. (Daschle started it, anyway, with his bragging about his rust bucket of a car and his numerous votes for higher taxes on the rich.) But in that case, call a spade a spade. Ask the question, "Are you now or have you ever been in charge of household help?" on the vetting questionnaire, and strike those who reply in the affirmative. Precious few talented, ambitious people will be left once that crew has been stricken from the rolls.

Anyone in search of a guiding principle, a bright line, or any other absolute won't find one. Michael Barone, king of the wonks, valiantly attempted to find a rule of thumb that divides Geithner's $34,000 from Daschle's $146,000 from Killefer's $298. Geithner, he says, is uniquely qualified to run Treasury, whereas lots of people know about Daschle's bailiwick, health care nationalization. But this explanation doesn't hold much water. Sometimes (oftentimes, in Washington) there simply is no rule. It's just that some people get screwed and some people sneak by, just like you and me when it comes to taxes. Looks like politicians really are just like us!

Katherine Mangu-Ward is associate editor at Reason magazine.

NEXT: Fraud, Punishment, and Libertarian Moral Theory: Can They Peacefully Coexist?

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  1. Ah, gah! TEH GLASSES AGAIN?

  2. With glasses he looks like an intellectual. Like Stallone with glasses. And red glasses of evil? Greatness.

  3. Seriously, I'm submitting that picture to Men Who Look Like Old Lesbians.

  4. The link to Read all about it doesn't work.

  5. He looks like Sally Jessy Raphael.

  6. I can't grok the conception of coercion that includes lying to someone in order to get something but leaves out, say, the threat to withdraw intensely valued affection in order to get something.

    Case closed.
    Will Wilkinson is such a fucking fag.

  7. So why are we acting like they're serial killers?

    Because they want to be excused from the laws that can put any of the rest of us in jail, laws that they passed, because of their years of "public service" which consisted of passing the very laws they broke but would have resulted in any of us peons landing in jail.

  8. Killefer got unlucky -- wrong place, wrong time. Daschle is one of the people responsible for the 67,024+ pages. He deserves worse.

  9. Good call SF and TofuSushi for the likeness.

  10. I would like to expand upon what I think is at the root of the outrage.

    Obama has established as the cornerstone of his presidency's mojo the idea that no one will be above the law in his administration. Here we have evidence that he holds his own appointees to looser standards than previously imagined in the throes of Changemania. Also, Obama has established his philosophy as one of asking Americans to sacrifice for the greater good of the collective (or some such permutation of that idea), so these revelations make those already dubious requests seem empty at best and manipulative at worst.

  11. Link won't work for me either. Internet Explorer.

  12. Link still dead. Firefox (on Linux)

  13. So why are we acting like they're serial killers?

    When Vito threatens to break my kneecaps when I don't pay the protection insurance, I'm not going to cry when he gets his broken by Guido for holding out on the shakedowns.

  14. So why are we acting like they're serial killers?

    Because they are sanctimonious, narcissitic twats who are being hoist on their own petard, that's why.

  15. I am ashamed, ASHAMED to be in a country where the glasses did not disqualify him from office but the failure to pay taxes did. Where's your compass, America?

  16. Where's Joe Biden to question these men's (and woman's) patriotism? Seriously Mr. VP, you should be disgusted with your colleagues and their hate for our country.

  17. They are part of the machine that enslaves us. I want them all to burn a fiery death. Serial killers are better people.

  18. 404 error here as well. Apparently the article just isn't up yet.

  19. I mean, Elton John wouldn't wear those things. I can just see him back stage saying to some assistant "Are you kidding? Just because i'm gay doesn't mean I have to wear the gayest glasses ever!"

  20. Because they want to be excused from the laws that can put any of the rest of us in jail

    Except you won't go to jail for doing what they did. You will pay a penalty and work out a payment plan if you can't come up with the cash. You're no good to the IRS in jail.

  21. And any man wearing those glasses will look like an old lesbian.

  22. You're no good to the IRS in jail.

    See, this is why we only take your thumbs...

  23. You mean like Wesley Snipes?

    Snipes sentenced to 3 years

  24. Income tax: The impossibility of calculating how much a driver provided to you is worth.

  25. Heck, I know who Daschle looks like! Mrs. Who!

  26. As some started to articulate already, the anger comes from the fact that they are part of the mafia who created the rules they've been caught breaking. To me it's exactly the same reason I'm still contemptuous of "good" cops who won't fight to rid the system of "bad" cops.

    KM-W's "everybody's doing it" piece misses the mark. Would she give a pass to a cop parking in front of a hydrant?

  27. I forgot to add:

    [catfight sounds] KM-W's "everybody's doing it" piece misses the mark. Would she give a pass to a cop parking in front of a hydrant? [/catfight sounds]

  28. Reason should just give up and stop publishing this crap. "Daschle, just like us!" Who pays you people to say this?

    What's the difference? Daschle voted to put those taxes there in the first place. He is one of the handful of people who are directly responsible for our dastardly tax burden, but he can't be bothered to pay what for HIM ONLY is a voluntary fee (since he voted for it).

    But no, only peasants are supposed to pay taxes to support, say, the companies that Daschle just made $5 million lobbying for.

    Reason Magazine- giving breaks to the Rulers in Washington, as usual. Free minds, everyone!

  29. I applaud people for cheating on taxes and am happy to know that many brave souls don't file at all...however...when it is the ruling calss who outwardly supports the tyrannical tax system it is nice to see them punished.

    The difference with Geitner is he worked for Kissinger Associates and Goldman Sachs...he helped organize a trillion dollar give away to the big time banksters...he is as good as god in this country...these people kill presidents and run phony "commissions". Look at the Bios and Geitner sticks out like a sore thumb...."Group of Thirty" you can't make this shit up? I thought group of thirty was a completely fictional group...nope.

  30. The trouble with Killefer is not that she got into tax trouble. The problem is that she let it go to the tax lien stage. Do you know how hard you have to work to get a tax lien put on your house? First, you have to ignore the IRS letter telling you that you owe $298. Then you have to ignore the three or four follow-up letters. Then you have to ignore the parts which talk about your remedies if you dispute the tax. Then you have to ignore the collection letter. Then you have to ignore the levy letter saying that the IRS is going to put a lien on your property. Then you have to ignore that lien when it is put on your property. Killefer's sin is not failure to declare her payroll tax obligation. A lot of people miss that. It is doing nothing about it for four or five years.

  31. Um, we've all been doing it for years? I guess I missed the memo, because I've been reluctantly paying taxes for years (all while being told that libertarians are evil selfish cheats). Your argument simply implies that I haven't been treating enough people like serial killers.

  32. The only true principled way to protest taxes is to not take advantage of the services they pay for. I could applaud a low-income worker who qualifies for welfare or unemployment benefits but refuses to apply for them or a congress member who didn't vote for a pay raise. But I have nothing but disdain for people who don't pay taxes but use the services rendered by others who do. A politician is a perfect example.

  33. they're just doing what the rest of us do every year. So why are we acting like they're serial killers?

    1. The rule of law. If an annoying law applies to the common people it should apply even moreso to those in power.

    2. Speak for yourself on the cheating on taxes business. I've never cheated on taxes, let alone on hundreds of thousands of dollars worth. I don't think I've even made enough to owe that much over my entire life.

  34. Oh, and

    3. Serial killers are generally afforded severer punishments than missing out on a Cabinet post. Tom Daschle will do just fine, even without the opportunity to fuck with our lives via the DHHS, I assure you.

  35. Sarah Palin's tax returns indicate that she did not include the $43,900 received for travel by her husband and kids. Palin claims to have donated $8,000 worth of clothing the last two years to charity. Palin's husband claims his hobby, you know the snowmobiles, is a business which lost $10,000 last year. Palin charged the tax payers for living in her own house,(Palin owns six homes), and didn't report it.

    It does not appear that Gov. Palin reported as income the per diem reimbursement she received for travel, meals, and lodging expenses as governor of Alaska. Her 2007 W-2 reports $107,987 of income as governor, and the Washington Post pegs her governor's salary as $125,000.

    In layman's terms that means that Palin was charging Alaskan tax payers for staying at home and calling it travel, then she didn't report it. This is illegal. There is no question that these per diems are taxable income.

  36. joe,

    Admit it you have nightmares about Sarah Palin.Was that the IRS or one of your lefty websites that audited the Alaska Governor?

  37. Yes, nightmares.

    There's this really awful one where she DOESN'T get the Republican nomination in 2012.

    I swear, I am donating money to that woman's primary campaign.

    But that really has nothing to do with the reason I posted that, which was to demonstrate exactly how much of partisan hypocrite your starburst-seeing ass actually is.

  38. "Make no mistake, tax cheaters cheat us all, and the IRS should enforce our laws to the letter. " Sen. Tom Daschle, Congressional Record, May 7, 1998, p. S4507.

    Karherine, when did reason writers become so blase about rank hypocrisy?

  39. joe: "Don't look here! Look over there! For the love of God and five Irish policemen, look over there!

  40. but here this time. Daschle sucks because of the $5 mill in ill-gotten gain. Paying taxes on it is beside the pt. Seems funny Obama wants to cap CEO pay and not politician pay from extras they make directly because of their position, not by any legitimate side business.

  41. Well, joe, when Sarah Palin is nominated by President Obama to be a member of the most ethical administration in the history of the universe, her tax returns will be relevant to the discussion of tax dodgers nominated to be members of the most ethical administration in the history of the universe.

    Oh, and those kind of claims require a link if they are to be regarded as anything other than the spittle-flecked ravings of a lunatic.

  42. Oh, and didja hear about the other Obama nominee who picked up a cool $700,000 in speaking fees while on the other side of the revolving door?

    Or what about the one who violated House ethics rules not reporting the fact that she was the treasurer of a lobbying group?

    What a clown show.

    Richardson - under ethics investigation.
    Geitner - admitted tax cheat/incompetent
    Daschle - admitted tax cheat/incompetent. $5,000,000 member of revolving door club
    Killefer - admitted tax cheat/incompetent.
    Solis - violates House ethics rules.

    All in two weeks!

  43. What a clown show.

    Richardson - under ethics investigation.
    Geitner - admitted tax cheat/incompetent
    Daschle - admitted tax cheat/incompetent. $5,000,000 member of revolving door club
    Killefer - admitted tax cheat/incompetent.
    Solis - violates House ethics rules.

    All in two weeks!

    Nice! This administration will not disappoint. All the talk of a new era instead of threatening to overhaul the very tenants of the human condition as Michelle would have it, will only reaffirm my lack of faith in it.

    Pull up a chair and grab the popcorn.

  44. If Obama really wanted to bring about "change" (I'm not holding my breath), he'd give every member of Congress and his administration 30 days to fix any and all tax problems, after which they would be audited by the IRS. Go after everyone on Capitol Hill; Dems, Reps, everybody.

    I generally have no problem with people not paying taxes, but it's a different story when they're the ones who write, vote for and enforce our tax code.

  45. Why do we treat them like serial killers? Because they make the rules, and choose to make them really hard to follow. I live in Ireland, and paying taxes here is easy: the govt knows how much you're earning and calculates a reasonable tax return for you automatically. If you just do nothing, it all works. (You can file a form if you want to change stuff, like adding extra deductions.) In the USA, the IRS knows enough info to fill out your tax return and send you a bill. But they don't, because people like Daschle listen to lobbiests from H&R Block.

  46. Here is my underlying gripe with all of these appointments who have been found to have a history of, erm, "Tax Problems."

    These people do not hesitate to vote "aye" to tax increases for the rest of us. Why? Because they know, deep in thier hearts that are 3 sizes too small (thank you, Dr. Seuss) that they are not going to pay them any fucking way!!!

    Members of Congress, who write the tax laws, should be held to pay triple for their tax mistakes. Maybe then they would at least write tax codes the rest of us understand! And, it would supply more cash to the government to pay for the "Economic Stimulus."

  47. Corey Cagle - Now THAT'S Change I can believe in! Bravo!

    I'd post that idea on whatever crackpot website Obama is using now, except I have some tinfoil hat type paranoia about it.

  48. Katherine,


    First off, I do not hire people and neglect to pay the appropriate taxes. It is too hard for you to keep track off all those difficult details hire them through an agency that takes care of it.

    If "you" want to work in government. "You" want to make policy, make tax laws or regulations, spend tax money, then following the laws you enforce on others in REQUIRED!

    You claim that it is just too hard for them to follow? Well then, maybe "you" should think twice about how good an idea those tax laws and regulations were.

    Your argument basically supports one law for us peons, and one law for the "important" people. I say again, BS.

  49. oh please
    There were several times in my life where I had self employment income. Each time I knew I had to pay that tax.

    He is NOT like me. He is a cheat.

  50. That was a very interesting read, thanks for taking the time to post it.

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