South Dakota Politics

Daschle’s Tax Problem

My SDP colleague, Jason Heppler, has been following this story. Here is the gist, from the Washington Post.

After a quarter-century in Congress, Thomas A. Daschle will return to Capitol Hill today in an unfamiliar role, summoned by former colleagues on the Senate Finance Committee to defend his reputation and his nomination to be secretary of health and human services amid revelations that he did not pay more than $100,000 in back taxes…

Daschle, a former Senate majority leader from South Dakota, will head to the Capitol today "ready and willing to answer any questions," said Jenny Backus, his spokeswoman. He will also inform lawmakers that in addition to the $140,000 in back taxes and interest he paid on Jan. 2, he intends to send the U.S. Treasury an additional $6,000 to cover Medicare taxes on the driver.

Just for the record, a hundred and forty-six thousand smackers is a lot more than a hundred thousand.

My esteemed Keloland Colleague and NSU Colleague Emeritus, David Newquist comments on the story. Apart from the hysteria, hyperbole, and exaggerations that are his MO, he gives what looks like an honest look at Daschle's problem. I say "looks honest" not to cast doubt on Professor Newquist's account, but merely to qualify my own grasp of the details.

Professor Newquist also notices SDP's attentions:

Of course, the Dementia Sisters at South Dakota Politics have termed it an outright case of tax fraud, and we needn't bother to find out the actual circumstances.

That "Dementia Sisters" thing is pretty good. Jason plays the saxophone, if I remember correctly. I play a pretty mean blues harp. If we can train Professor Schaff in the bongos or something, The Dementia Sisters may be the next YouTube hit. But I humbly submit that this is sensible and moderate blog, and that "dementia" is really unfair. See "hysteria and hyperbole" above. And I note that Jason hardly accused Daschle of tax fraud. See "exaggeration."

I note that until now only one of us sisters has mentioned the story. I would also note that a lot of what Professor Newquist says about Daschle's defeat and subsequent career has been said here by yours truly. I agree that Daschle has suffered from local resentment over his national stature, and that this resentment was one reason he lost his 2004 reelection bid. I have said as much, and I have said that I didn't think this was a good reason to have voted against our former Senator. So on these matters, David Newquist and I are in agreement. I especially liked this paragraph:

South Dakota has dumped a number of incumbents: Sen. Abdnor, Sen. George McGovern, Sen. Larry Pressler, and Sen. Tom Daschle. We assume that politicians understand that they serve only at the behest of the electorate, but what do we do with politicians when we are through with them?

Well, yes. I might not agree with all the reasons that my fellow South Dakotans voted against Tom Daschle, though I hardly disagree with their decision. I also think that Daschle lost the 2004 Senate election because he faced an opponent who was as good a politician as he was. But if an unfair resentment of Daschle was one of the factors that encouraged the good people of this state to unseat the Senate Democratic leader, that resentment was nonetheless a profoundly democratic passion. Unlike Professor Newquist, we did not "assume that politicians understand that they serve only at the behest of the electorate [my emphasis]."   We apparently think that politicians need to be reminded of that fact. I suspect that this would be clearer to Professor Newquist, and perhaps less clear to me, if the party decals were reversed.  See Todd Epp for a thoughtful treatment of this question. 

I agree with Professor Newquist that the life of politicians after they leave office is a problem. If you don't believe the two of us, ask Barack Obama, who has had to relax his own standards against recent lobbying to get one of his chosen appointees. 

But I think that the real question of this story is something else. Two of Obama's cabinet appointees have now run into trouble over a failure to pay taxes that they should have known were due. Daschle has consistently refused to release his tax returns, as John Thune did.  So how seriously should we take this? On the one hand, it is important for the President to get the people he wants into these posts. There is a real danger here, and Professor Newquist hints at it, that too exacting a standard will result in mediocre appointments. On the other hand, saying that these posts are too important to let little things like obeying the law get in the way surely encourages contempt for the laws. There is a real danger in the view that indispensable people shouldn't be held responsible for their past affairs. Of course it's possible that the tax code is so complicated that scrupulous people often can't get it right.  If so, then maybe a flat tax would solve the problem?

I am not sure how to resolve this, but I don't think it's demented to want to bring attention to the facts. That is what SDP has done.

Senators Questioning Daschle's Tax Filing

UPDATE:  This isn't the first time Daschle has run into tax problems.  Long-time readers of this blog will recall Daschle taking advantage of the homestead tax exemption in 2003 when he purchased a home in Washington D.C., which caught the attention of bloggers and reporters (see here, here, here, and here for Mansiongate; also see Jon Lauck's Daschle Vs. Thune, pp. 177-178).  Thune also challenged Daschle to release his tax returns between 1999 and 2003, which Thune made publicly available during the campaign.  Daschle never made these records available, and the South Dakota press never challenged the former Senator to release them (despite David Kranz praising Daschle in 1982, while working at the Mitchell Daily Republic, for releasing his tax returns during his run for the House of Representatives).

Obama was elected on the platform of promising to oppose corruption and fraud in Washington D.C., yet in the last week who high level cabinet appointees have had ethical issues.  Who else in the Obama administration will be either too incompetent or dishonest to declare their income and pay their taxes? 

UPDATE II:  Here's more on Daschle's past tax problems.

Original post follows:

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Associated Press:  "Republican and Democratic senators on Sunday questioned how former Sen. Tom Daschle could make a $128,203 mistake on his taxes but said they were not prepared to oppose his nomination as health secretary."

Also note this:  "Former South Dakota Senator Tom Daschle waited nearly a month after being nominated to be secretary of health and human services before informing President Obama that he had not paid years of back taxes, the Washington Post reports.” 

And, finally, Tom Maguire writes:

He became concerned in June? Call it Uncanny Coincidence, but it was early June when Hillary conceded and it became crystal-clear that Obama would be the Democratic nominee. And since Daschle had been an early and important Obama supporter, it also became clear that Daschle himself might need to start thinking about his possible role in a Obama administration.

As to the idea that it took his accountant six months to resolve these questions, please - is this the sort of glacial progress we can expect as Daschle oversees the transformation of the US health care system? For any Democrats out there not familiar with the process by which the rest of us pay our taxes, most returns are filed by April 15; summertime is the slow season and one would hope that as important a person as Tom Daschle could have gotten an answer promptly, if he had so desired. In fact, Daschle only got his answer after he had been tapped for a post requiring Senate confirmation; if Daschle had gotten the nod for a consigliere spot in the White House, I have no doubt his accountant would still be researching this.

Let’s recap for folks who are having trouble keeping up - Geithner, our new Treasury Secretary and overseer of the IRS, learned by way of a 2006 IRS audit that he had a tax problem for 2001 through 2004, but relied on the three year statute of limitations to avoid payment on the 2001 and 2002 liabilities; he resolved these only after his nomination in late 2008.

Daschle “became concerned” last June but dragged his feet on resolving the issue until after he had been nominated to a post requiring Senate confirmation. 

Be sure to read the whole thing.