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How Can You Be A Millionaire and Never Pay Taxes? February 12, 2009

Posted by Daniel Downs in Barak Obama, Democrats, ethics, moral virtue, news, politics, taxes.
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When he hosted Saturday Night Live on January 21, 1978, comedian Steve Martin explained how to be a millionaire and never pay taxes. Martin said, “First … get a million dollars. Now … you say, Steve … what do I say to the tax man when he comes to my door and says, ‘You … have never paid taxes.’? Two simple words. Two simple words in the English language: ‘I forgot!’ How many times do we let ourselves get into terrible situations because we don’t say ‘I forgot’?”

Today, you get elected to the U.S. Senate, lose your seat, and then get a job with a major lobbying firm and that’s how you get a million dollars. (Or, in Tom Daschle’s case, $5 million.) And when someone discovers that you didn’t pay all your taxes, you simply invoke the Steve Martin defense …“I forgot.”

Steve Martin got a lot of laughs when he recommended the “I forgot” defense. But when the average American worker has to work 113 days just to pay their taxes and the average American household spends more on taxes than on housing, food and clothing, it is not funny at all when powerful politicians get caught cheating on their taxes and try to excuse their behavior by invoking the “I forgot” excuse.

Some might call that the “audacity of amnesia,” but it’s the very excuse that both Timothy Geithner, nominee for Treasury Secretary, and former Democrat Senate Majority Leader Tom Daschle, nominee for Secretary of Health and Human Services, used for not paying all their taxes. So did former Clinton Administration Assistant Treasury Secretary Nancy Killefer, appointee for the new position of Chief Performance Officer. Now Sam Sayyad, the husband of Hilda Sollis, the nominee for Labor Secretary, is using the “I forgot” defense. To be accurate, Sollis and her husband say they were “unaware” of the $6,400 in tax liens against his business.

Daschle, Geithner, Killefer and Sollis are not the only high profile politicians in Washington with a tax problem. Rep. Charles Rangel (D-NY), the chairman of the House Ways and Means Committee apparently forgot to pay his taxes, too. And, if Minnesota Democrat Senate candidate Al Franken winds up in the U.S. Senate, Washington will welcome yet another high profile liberal who had a problem keeping their taxes paid.

The “I forgot” defense actually worked for Geithner since the Senate confirmed his nomination. But it didn’t work at all for Daschle and Killefer who withdrew their names from consideration. The fate of Sollis’ nomination is yet to be determined, but it looks like the big labor unions are determined to get her confirmed, no matter what. And Rangel may get by with simply paying back taxes with no penalties.

The inexcusable behavior of Daschle, Geithner, Killefer, Sollis and her husband, and Rangel gives further evidence of another serious issue. State and federal tax laws are so complex it is nearly impossible for individuals and businesses to know for sure that they have paid every dime they owe.

Consequently, if Daschle et al. had taken the line of defense that the complexity of the state and federal tax codes were to blame for their unpaid tax liabilities, public opinion might have been more sympathetic, especially if they called for simplifying the tax code. Given the attention directed to such powerful and influential people failing to pay all of their taxes, the timing is perfect to push for a simple flat income tax or a consumption tax.

However, there is another issue here that goes well beyond the complexity of our tax laws. It is the issue of a double standard that very obviously exists between powerful and influential elites and everyone else. For perhaps 99 percent of U.S. taxpayers, the “I forgot” defense would not be as well received by the IRS. Clearly, Daschle and the others are being treated differently (both by the IRS and the media) than private citizens or small business owners are treated when they fail to pay their taxes. Nothing will undermine our legal system and our government more than the perception that the law does not treat everyone equally.

Finally, perhaps the biggest challenge facing America today is the lack of character. While I might believe that any one of these powerful and influential people might have made a mistake in paying their taxes, I can’t believe all four of them did. This is actually an issue of integrity. And now, at this point in our nation’s history, it is integrity that is missing.

If there is one thing that liberals and conservatives should agree on it is the need for political leaders whom we can trust. For politicians from either party to break laws, in this case our tax laws, and simply brush their law-breaking aside by using the “I forgot” defense reveals something more troubling. It reveals an attitude that they are special, that they should be treated differently.

When people are working almost a third of the year just to pay their taxes, powerful politicians should not be exempt. To even expect to be treated differently is the audacity of arrogance.

Gary Palmer is president of the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

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