Taxation and Our Representation

On Tuesday, Barack Obama uttered three words seldom heard in Washington: “I screwed up.” Yet following the implication of a third high-level White House appointee in income tax arrears, the president isn’t the only one who should be issuing mea culpas.

Earlier this week, heath and human services secretary pick Tom Daschle became the second of Obama’s nominees to withdraw his name from consideration because of tax problems. This happened only a few hours after prospective chief performance officer Nancy Killefer did the same. Daschle explained that he withdrew so that his mistake would not “be a distraction” from Obama’s health-care initiative, but the sentiment was too little too late: Both developments unfolded in the midst of controversy surrounding recently confirmed treasury secretary Timothy Geithner, who was found to have delayed payment on $34,000 worth of income taxes.

All things considered, the tax mishaps may have been honest mistakes, and none of the cases seem particularly egregious. However, at such high levels of government, even the smallest skeletons in the closet make national headlines. In the midst of two wars, a struggling economy, and a fledgling administration, the last thing Americans need is a reason to distrust their leaders. When those at the helm neglect such basic laws, voters cannot help but question their motives. Being in such visible public positions, Daschle, Killefer, and Geithner should have been especially careful to fulfill their legal obligations.

For that matter, these problems should have been caught earlier—it is unfortunate that they should be commanding so much attention now, damping public confidence as the new administration fights to rally support for its economic stimulus package and carry out much-needed health-care reform. These cases make it clear that we should have higher levels of scrutiny over our civil service, demanding more tax records from public officials to identity these problems before they can cause such a damaging situation. Just like other citizens, politicians should be held responsible for paying their taxes. Daschle may have been a promising candidate, but America cannot afford even the appearance of a double-standard.

Finally, this wave of scandals is the most recent manifestation of an inefficiently complex and bloated tax system. According to the IRS, more than 60 percent of Americans use professional help to prepare their income-tax returns. A convoluted system of deductions, rules, and exceptions, the U.S. tax code takes more than 66,000 pages to explain. Chris Edwards, a director of fiscal policy at the Cato Institute, remarked that just complying with the current tax system costs the nation around 2 percent of its GDP. In light of these recent examples and as part of larger economic reforms, the tax system should certainly be streamlined.

But the complexity of the tax code is no excuse for neglect on the part of Obama’s recent nominees. It is disgraceful that these accusations had to come to light at so pivotal a juncture. Our new administration has made a commitment to leave behind the politics of the past, but, if Washington is to move toward an era of heightened honesty, paying taxes is a good place to start.