Daschle, Einstein and the income tax

Tom Daschle is supposed to be a pretty smart man. The people of South Dakota elected him as their Congressman in 1978. (South Dakota has a single member of Congress representing the entire state). Then South Dakotans elected him to the United States Senate in 1986 and kept him there for 18 years. Our Senators thought so much of Daschle they elected him majority leader: the very top spot in the whole Senate. Daschle was the biggest, most prestigious overachiever in the most prestigious club of overachievers in the world.

Now, Barack Obama wants to appoint Tom Daschle as the next Secretary of Health and Human Services, a position overseeing one of the most expensive and complicated bureaucracies in world history. Next year, HHS will use over 7,100 “delivery sites” across the country to distribute over 760 billion dollars (i.e. approaching a trillion) in money and other forms of welfare. Being Secretary of HHS is a difficult task, but, if anyone is up for the challenge, it would seem to be Daschle-the-overachiever.

Unfortunately, Daschle has run into problems. Specifically, for about three years (from about 2005 through 2007) he couldn’t figure out his own income taxes. It’s hard to understand exactly what he did wrong. Somebody gave him a limousine and chauffer to use, and he did not report it as income, and he took some deductions that weren’t legal. The bottom line is that he missed on his personal income taxes by over $140,000.

Then there’s the case of Tim Geithner. Until a few days ago, he was President of the Federal Reserve Bank of New York. Now, he’s in charge of President Obama’s trillion dollar bailout. Like Daschle, everybody thinks Geithner is heap big smart. When Obama nominated Geithner to run the bailout, Senator Charles Grassley – a Republican – said, “To some he isn’t merely the best choice, to some he’s the only choice.”

But despite his intelligence quotient and his famous command over complicated numbers, Geithner can’t figure out his own income taxes either. He failed to pay some taxes and took deductions he shouldn’t have. Geithner did better than Daschle, but he still missed the mark by about $15,000 over two years.

If you asked the average person on the street to name the most intelligent person of the 20th century, most would probably say Albert Einstein. Here’s what Einstein said: “The hardest thing in the world to understand is the income tax.”

And so nobody really understands the income tax code. But everyone is still required to comply with every word of it. You’re hit with big penalties, or even prison, if you don’t.

Taxation does not have to be this way. Taxes can be simple. Take sales taxes. The government simply skims off a few cents of every dollar you spend when you spend it. No accountants. No IRS. No embarrassed smart people.

Unlike taxpayers, politicians love the income tax. It gives them a chance to engineer society. They can give deductions for things they like, and tax things they don’t. To the people in Washington, the income tax means power.

But wait. The Observer was wrong. Politicians don’t always love the income tax. Sometimes they despise it like the rest of us: Like when they have to figure out their own taxes. Just ask Tom Daschle.

The Settlement Observer is a resident of Farmington.