Tom Daschle did not pay more than $128,000 in taxes for the use of a car and driver provided to him by a consulting firm. He paid the back taxes, and nearly $12,000 in interest, last month. Today, Daschle sent a letter to the Finance Committee, which will be considering his nomination. He explains:
Last fall, when I was being considered for this position, the Presidential Transition Team's vetters reviewed my records. During the course of those reviews, the vetting team flagged charitable contributions they felt were deducted in error. When my accountant realized I would need to file amended returns, he suggested addressing another matter I had raised with him earlier in the year: whether the use of a car service offered to me by a close friend might be a tax issue. In December, my accountant advised me that it should be reported as imputed income in the amended returns. At about the same time, the friend's company, a consulting client, informed my accountant of a clerical error it had made on the Form 1099 it provided to me and reported to the IRS for 2007. In an effort to ensure full compliance and the most complete disclosure possible of my personal finances, we remedied these issues by filing amended tax returns with full payments, including interest. We provided all this information to the Committee in addition to the completed Committee questionnaire and my responses to your staff's questions. I disclosed this information to the Committee voluntarily, and paid the taxes and any interest owed promptly. My mistakes were unintentional.
Given Daschle's wealth and influence, it's hard to believe that he actually meant to defraud the government of $100,000 at the cost of any political future he might ever wish to have. The car and driver provided by Hindery's firm did not come with a 1099 form. It's a stupid error, but there is a strong case to be made that it was an error. And the Senate wants to make that case. The problem is that Daschle's tax problems come in the aftermath of Tim Geithner's tax problems. Unpaid taxes are becoming the illegal nannies of the Obama administration. The GOP is flailing right now. No one should be giving Republican House Whip Eric Cantor lines like "it’s easy for the other side to advocate for higher taxes because you know what? They don’t pay 'em." The first question is whether this will derail Daschle's nomination. Probably not. An issue like this could go either way. What tips the odds in Daschle's favor is that the Senate is a chummy place and Daschle is well-liked within its walls. "If all you knew about Tom Daschle was that he used to be a senator and he made a mistake and had to pay over $100,000 in back taxes, you would have a right to be skeptical, even cynical," said Sen. Richard J. Durbin. "But if you know Tom Daschle, you know better." The Senate knows Tom Daschle. He gets the benefit of the doubt. Similar statements of support have come from Ted Kennedy's office, John Kerry's office, and even Bob Dole's office. "I read the record about the tax issues raised, and while mistakes were made they were innocent ones which have been corrected primarily by Senator Daschle himself," said the former Republican majority leader. Dole will be introducing Daschle before his confirmation hearing later this week. The second question is whether this should derail Daschle's nomination. Will Daschle make it through the Senate but be rendered useless as leadership on this issue? Here, too, the answer is probably not. No one has sketched a plausible future in which Daschle's tax problems don't disrupt his confirmation but do poison the administration's health reform effort six months down the line. Indeed, watching his Senate colleagues rally around him actually underscores Daschle's fitness for the job. Daschle is uniquely respected by this former colleagues and appears able to ensure himself a more than fair hearing even under less than ideal circumstances. Watching Daschle's former colleagues leap to his defense and attest to his integrity and fairness, it's hard to argue that this isn't the guy you want convincing and cajoling and reassuring nervous senators when health reform turns hard. You want the guy who gets the benefit of the doubt. You want the guy they viscerally trust, the guy they believe even when the obvious political move is to discount his testimony. This whole thing speaks rather poorly of Tom Daschle but rather well of his skills for this job.