What The Geithner Scandal Can Teach Us About The Tax Code
I had to chuckle a bit today when I read of Obama’s Treasury Secretary pick Timothy Geithner trying to explain away his tax evasion by suggesting that it was because he doesn’t know how to run Turbo Tax.
Treasury Secretary nominee Tim Geithner, the president and chief executive officer of the Federal Reserve Bank of New York, filed his own taxes using Turbo Tax during the period he neglected to pay thousands of dollars in taxes.
Under questioning from Senate Finance Committee Republican member Chuck Grassley, Geithner was very reluctant to disclose which tax filing software he used. He quickly suggested the software wasn’t the problem; he was.
Aside from the spectacle of watching someone who, if he and Obama have their way, would be in charge of the IRS tell the public that he is too incompetent to file his own taxes, I’m struck by what such a turn of events suggests about our tax code in general. Especially given how qualified both Republicans and Democrats suggest Geithner is for this job. If a supposed expert like Geithner can’t even navigate the tax code, what about your average citizen?
Now, I think that Geithner’s tax evasion was probably purposeful (just my opinion) but going with the idea that it was an honest mistake it’s really kind of disturbing. A well-respected candidate to head up the Treasury Department can’t file his taxes right? If he can’t get it right, nobody can. And I’d be willing to bet that most tax returns filed in the United States have errors because our tax code is so complicated that nobody can understand it.
Which is pretty dangerous if you think about it. If we’re all basically tax cheats, be it inadvertent or not, then we’re all in hock to the government in one way or another. And with the tax code as complicated as it is, compliance costs (an expense on top of the actual taxes we pay) are through the roof.
The lesson we should take from Geithner’s situation is that our tax code needs to be simplified. Now. But unfortunately the maze of deductions, refunds, rebates and exemptions serves the big government crowd well by masking just how much we pay in taxes.
Ask your friends how much they pay in federal taxes. I’d be willing to bet 1 in 10 know for sure off the top of their heads. Then ask them how much they got back from the government. I’ll bet 9 in 10 remember that. Which is exactly how the big government people like it. They want you to remember that check you got from the Treasury, not all the money that was withheld from your paycheck through the rest of the year.
