It looks like Tim Geithner isn’t the only Obama nominee with a tax problem, former Senator Tom Daschle has an even bigger one:
Thomas A. Daschle, nominated to be secretary of the Department of Health and Human Services, did not pay more than $128,000 in taxes over three years, a revelation that poses a potential obstacle to his Senate confirmation.
The back taxes, along with $12,000 in interest and penalties, involved unreported consulting fees, questionable charitable contributions, and a car and driver provided by a private equity firm run by entrepreneur and longtime Democratic Party donor Leo J. Hindery Jr., according to a confidential draft report prepared by Senate Finance Committee staff.
A spokeswoman for Daschle confirmed last night that he recently paid back taxes in excess of $100,000. She said that Daschle, a former Senate majority leader, and his accountant discovered the error regarding the luxury car service and reported it to the committee after his vetting was completed.
Daschle paid the back taxes six days before his first Senate confirmation hearing with the Senate Health, Education, Labor and Pensions Committee. The Finance Committee, however, has jurisdiction over his nomination.
Daschle, one of President Obama’s earliest and most steadfast campaign supporters, is the second Cabinet nominee to acknowledge tax errors. On Jan. 13, Timothy F. Geithner, who was chosen to run the Treasury Department, disclosed that he had not paid some taxes and subsequently paid $43,000 in taxes and penalties. He was sworn in on Jan. 26.
Because of an apparent clerical error by the equity firm, Daschle did not report more than $83,000 in consulting fees in 2007 and has not provided sufficient documentation relating to $15,000 in charitable contributions over three years, according to the panel’s report. He and his wife, Linda, gave $276,000 in charitable contributions during the three-year period being studied by the panel, according to a Daschle aide.
Daschle’s only saving grace may be the fact that, as a former Senator, he is likely to get some degree of deference from his former colleagues. Of course, Senatorial deference didn’t help John Tower back in 1989, and, given the size of his tax “error” it may not help Daschle this time.
James Joyner points out, correctly I think, the difference between Daschle’s situation and the controversy that surrounding Treasury Secretary Tim Geithner over his tax issues:
Unlike Timothy Geithner, who was confirmed as Treasury Secretary despite failure to pay self-employment taxes which he owed even though he wasn’t self-employed thanks to a quirk in the tax code, it’s going to be hard to argue that Daschle is “indispensable.” But, as a former Senator — and leader in the Senate — he’s got an inside track at a pass on this. The real question isn’t whether the failure to pay taxes here is forgivable but rather how well liked he was by former colleagues.
In the end, if Daschle is confirmed, it’s likely to be by a nearly-strict party line vote.