Saturday, January 31, 2009

I Second That Evasion: Tom Underpays Tim

"Kleptocracy is a term applied to a government that extends the personal wealth and political power of government officials and the ruling class (collectively, kleptocrats) at the expense of the population" (Wikipedia)

The motto of this blog is "In Equity, Veritas". The term "equity" refers both to fairness and ownership.

Bill Clinton and Al Gore each built up personal net worths of about $100 Million within about 7 years of leaving public service. Nice work if you can get it, n'est ce pas? Tom Daschle was not quite in their league, but he apparently learned that a penny of tax avoided is better than a penny earned (because a penny of tax avoided has no tax on it!).

Former Democratic Majority Leader Daschle is Mr. Obama's nominee to be Secretary of Health and Human Services. The importance of this post is tipped to be greater than usual, because of Mr. Obama's plans to make the health system fairer and more universal.

Here is the Times' headline:

"Use of Free Car Lands Tom Daschle in Tax Trouble"

DoctoRx here: Doesn't sound too bad, does it? Perhaps just a forgotten couple of limo rides?

President Obama's pick for health and human services secretary, Tom Daschle, failed to pay more than $128,000 in taxes, partly for free use of a car and driver that had been provided to him by a prominent businessman and Democratic fund-raiser, administration officials said Friday.

Note the word "partly", whichindicates that the headline of the article was too easy on Mr. Daschle, and also note that $128,000 far exceeds Treasury Secretary Tim Geithner's tax underpayments.

Mr. Daschle, concluding that he owed the taxes, filed amended returns and paid more than $140,000 in back taxes and interest on Jan. 2, the officials said.

The car and driver were provided by Leo Hindery Jr., a media and telecommunications executive who had been chairman of YES, the New York Yankees regional sports network. In 2005, Mr. Hindery founded a private equity firm known as InterMedia Advisors. Mr. Daschle was chairman of InterMedia’s advisory board.

In a financial disclosure statement filed this month with the Office of Government Ethics, Mr. Daschle reported that he had received large amounts of income from InterMedia, including more than $2 million in consulting fees and $182,520 in the form of “company-provided transportation.”

Under his consulting arrangement with InterMedia, the report said, Mr. Daschle received $1 million a year, or $83,333 a month. The payment to Mr. Daschle for May 2007 was omitted from the annual statement of income sent to him by InterMedia. Ms. Backus said the omission resulted from “a clerical error by InterMedia.”

The White House and the Senate majority leader, Harry Reid, Democrat of Nevada, affirmed their support for Mr. Daschle.

It's nice to know that Mr. Obama opposes high pay for financial industry types. Lawyers who lobby under the guise of "consulting", however, can earn the big bucks and retain his "support".

The committee report said Mr. Daschle had told the committee staff that “in June 2008, something made him think that the car service might be taxable, and he disclosed the arrangement to his accountant.”

“Under Section 132 of the Internal Revenue Code, the value of transportation services provided for personal use must be included in income,” the report said. “Senator Daschle estimated that he used the car and driver 80 percent for personal use and 20 percent for business.”

"Something made him think" that his personal use of a free car "might" be taxable?

Good for him! A deep thinker, obviously . . . but an honest one? The article points out that he did not pay his back taxes until January 2009, when he knew he was going to enter the public eye. Yet he cleverly suspected that personal use of a company car and driver was in fact a taxable service seven months earlier, and even consulted with an accountant about it?

An administration official said Mr. Daschle’s failure to pay the taxes was “a stupid mistake.” But, the official said, Mr. Daschle should not be penalized because he had discovered the tax liability himself, paid up and brought it to the committee’s attention.

DoctoRx here: Res ipsa loquitur, as the lawyers say ( usually translated as, "the thing speaks for itself"). Don't you really, really want people who make "stupid mistakes" performing surgery on the health care system!

That opinion from the please-don't-name-me administration official, besides being dubious, is not even accurate. If people can really think that not being Secretary of HHS is a "penalty", then perhaps Mr. Daschle and Mr. Obama can take a meeting together and review their horn books to recall what a penalty under the tax and other law really can be. Is returning to a multi-million dollar a year "consulting" business really a penalty?

There's more (the Times again):

The car and driver were not Mr. Daschle’s only problems. The Finance Committee said he failed to report consulting income of $83,333 on his 2007 tax return and overstated the deductions to which he was entitled for charitable contributions from 2005 to 2007. In his amended tax returns, he reduced the deductions by $14,963.


Had enough yet? There's still more:

Members of the committee staff from both parties have been examining a number of other issues, including his relationship with EduCap, a student loan company.

Some members of the staff have also been asking whether Mr. Daschle should have registered as a lobbyist while working at the law firm Alston & Bird, which itself was registered as a lobbyist for EduCap and for many health care companies.

In his financial disclosure report, Mr. Daschle said he received compensation of more than $5,000 for providing “policy advice” to EduCap. The exact amount was not disclosed.

In its report, the Finance Committee said its staff was still reviewing “whether travel and entertainment services provided to the Daschles by EduCap Inc., Catherine B. Reynolds Foundation” and the Academy of Achievement “should be reported as income.”

In his financial disclosure statement, Mr. Daschle said he had received $2.1 million in “wages and bonuses” from Alston & Bird and more than $390,000 for speeches to groups like America’s Health Insurance Plans. He also said he had received more than $5,000 for giving “policy advice” to the insurer UnitedHealth.


So here we have it. Mr. Daschle is voted out of office by the good people of South Dakota (median household income in 2004 was $39,000). He goes not for public service or an academic post, but rather for the big bucks as a "consultant".

Here are the two clients listed here and their descriptions:

"Intermedia is a leading international research and consulting organization specializing in media and communications".

Educap: "Student loans to help you succeed in life".

Quite some healthcare-related activities. Well, apparently Barack Obama and Harry Reid believe that consulting in those fields is a great qualification to lead the reshaping of healthcare (back to the Times article):

The White House and the Senate majority leader, Harry Reid, Democrat of Nevada, affirmed their support for Mr. Daschle.

James P. Manley, a spokesman for Mr. Reid, said: “Senator Daschle will be confirmed as secretary of health and human services. He has a long and distinguished career in public service and is the best person to help reform health care in this country.”

DoctoRx here. Public service? Do they expect us to believe that while earning millions a year "consulting" for a media company and a student loan company, he was burning the midnight oil at his own expense studying the intracacies of health care policy? Is there no one in the entire US of A who actually has spent a career in health care policy?

The best person?

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