The election of Barack Obama to the Presidency of the United States was supposed to usher in an administration that would deliver on campaign promises of a different kind of politics in Washington, a kind of politics that would restore integrity to the Oval Office and the nation as a whole. Now, standing on a foundation of promises, Barack Obama is finding himself in a difficult position as he tries to build an effective administration while idealism is meeting difficult realities.

Three nominees to the Obama administration have found the road to confirmation by the Senate to be rocky. All three have had indiscretions on their taxes become major issues. Only one, who ironically was nominated for Secretary of the Treasury, completed the path from nomination to confirmation before withdrawing themselves from consideration.

Timothy Geitner, who was confirmed as Secretary of the Treasury, failed to pay taxes on income earned between 2001 and 2004 when he was employed by the International Monetary Fund. While he paid income taxes on these earnings, he did not pay self-employment taxes. IMF employees are technically self-employed and required to pay taxes as such. While Geitner did his own taxes for a time, an accountant later failed to recognize the problem as well. In addition, due to the confusing nature of how the IMF, and other foreign employers, handle tax documentation, Geitner’s mistake wasn’t unique. In fact, the IRS made a settlement offer to employees in the same situation as Geitner in 2006 in order to bring them into compliance with the tax code of the United States.

There’s also the issue of Geitner hiring a foreign housekeeper who who’s work permit expired three months before leaving his employment. The fact that she had a valid permit when she started working for him prior to the expiration makes this issue minor in my opinion.

The only issue I have with Geitner is the position he was nominated for, Secretary of the Treasury, and that his tax returns were not amended until after his nomination. I expect someone a bit more financially savvy to manage our federal finances.

Tom Daschle, who was nominated for Secretary of Health and Human Services, was meant to be a close partner with Barack Obama to move forward with health care reform, including steps toward socialized medicine. His significant tax issue revolved around a car and driver lent to him by a business associate with the InterMedia, which employed Daschle. The car and driver were not a part of his compensation package, and was not declared on his taxes for the period in which the services were lent to him. Originally Daschle’s taxes were flagged during the vetting process due to a fraction of his charitable expenses not having proper documentation, but during the amending of his returns to correct that error, Daschle and his accountant decided that he needed declare the use of the limo and driver as well. Doing so opened himself up for criticism and speculation that he purposefully avoided paying taxes on the limo and driver, even though he voluntarily corrected this mistake during the amending of his returns to correct a different, and relatively minor, issue.

Daschle removed himself as a nominee yesterday, which has been received with a mixed reaction from supporters of the Obama administration. Personally, I don’t see his tax mistakes as being any more of an issue than Geitner’s, and the fact that Daschle was meant to work with health care, and not the finances of the nation, minimizes the relevance of his taxes in my view. I think his stepping aside is a loss for the administration and our country. While I have every confidence that Obama will nominate someone who will be able to get the job done, we already had a nominee who fit the bill. It’s as though Daschle is paying for his and Tim Geitner’s mistakes, and I don’t see that as being equitable at all. As a sacrifice toward the integrity of the administration, I respect Daschle’s decision to remove himself from consideration; however, I’m not fully in agreement than the right lamb was sacrificed.

Nancy Killefer was to be the first Chief Performance Officer for the federal government. She stepped aside citing tax issues as well, but released few details. If you weren’t paying attention to the movements of the administration, you probably missed the creation of this position or that Killefer was to fill it. Her removal wasn’t reported as in-depth as Daschle’s, and it happened on the same day. It seems that she was scared off by the possibility of errors on her taxes becoming a national issue as well, and slowing down the progress of the administration. Nothing can really be said of whether her tax issues were dishonest or just honest mistakes.

The reaction from some over all of this has been to cite the complexity of the tax code of the United States. The broad definitions of various types of income, and the requirement of necessary documentation in case of audit, can cause any person difficulty at any point. The honest mistake of hundreds of dollars for an average person can equate to hundreds of thousands of dollars for those making significantly more. Everything is relative. I don’t think we should be quick to jump aboard the bandwagon of those who believe these people are crooks and purposefully crafted their taxes to avoid paying what was due.

Then again, everything seems to be fair in love, war, and politics; right?

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4. Responding to McWaters’ Response