Another Politician with a Tax Problem?

Team Obama has chosen yet another politician with tax problems to serve in the administration. That brings the number to five unless I’ve missed someone along the way.

Kansas Governor Kathleen Sebelius has been nominated to be the next Secretary of Health and Human Services. Democrats are saying the tax problems, for which she recently paid $8,000, are minor mistakes involving complicated dealings. She’s made restitution, so what’s the big deal? Interestingly, Republican senators are also downplaying the tax problem. Maybe it means that it’s a non-issue; maybe the Republicans aren’t interested in paying unimportant political games during a recession and a war. On the other hand, maybe some people are afraid that, if they complain, their own finances will be scrutinized.

It’s interesting that all of these people who’ve made tax mistakes are suddenly able to find them and pay them off around the time they’re up for an exciting new job. And all of these politicians who have been in trouble have had a hand in creating this system. Don’t get me wrong—I think many (if not all) of these mistakes were legitimately that—honest mistakes. The tax code is way too complicated.

Most people who don’t simply file the E-Z form are at the mercy of their tax preparers, but how can we tell the honest mistake-makers from the cheaters? And every time we try to downplay a politician with tax problems, do we further embolden cheaters?

We need to simplify the system. Some people advocate a flat tax where everyone pays the same percentage. There are others, though, who say the rich should pay more. Of course, if I pay, say, 15% and a rich guys pays 15%, he is paying more in actual dollars, so what do you do with that?

Maddeningly, though, as you stop and analyze it, some deductions make a lot of sense. What if I give thousands to church and other charities each year, but my neighbor gives nothing? If I’m giving so much to the public good, shouldn’t I get a tax break for that? I have no children; if my neighbor has five kids shouldn’t he get a little tax relief? Once you start with logical tax breaks like these, it becomes a slippery slope.

I wish the tax code was less complicated. I also wish relatively rich politicians with complicated financial dealings would hire top notch accountants before they came under national scrutiny. But as the saying goes, “If wishes were saddles, we’d all ride.”