Why Pay Taxes If Government Employees Don’t?

You know America is great when a guy named Tim Geithner can evade $34,000 in taxes, get appointed to become the US Treasury Secretary puppet, AND make repeated claims in the press to raise taxes in 2011!

Well of course it’s a good idea to raise taxes if you can evade them as craftily as you can Treasury Secretary Geithner!  So good of you to say you messed up on your own tax returns (oopsie), and to ignore your old employer’s repeated written statements to pay your taxes between 2001 and 2004 at the IMF.  So good of you to finally pay the $34,000 taxes you evaded once Obama selected you as the new Treasury Secretary!  We all know you would have paid the $34,000 in back taxes even if Obama didn’t appoint you right? *wink* *wink*.

TIM GEITHNER ISN’T ALONE!

Thanks to The Washington Post, the venerable newspaper has now revealed that some 41 Obama aides have not paid $830,000 in back taxes either!  Now, now, don’t judge since that’s only $21,000 in back taxes owed per Obama aide.  However, if you calculate the total amount of taxes owed by delinquent government employees, the number comes out to over $2 billion dollars! Let’s be fair here, as I’m sure that both parties owe tons of back taxes.  That said, if your party is for big government and higher taxes, shouldn’t you be a little more honest? Nah.

The reason why it is actually OK to evade taxes is because we follow our leaders.  Government employees are raking it in, and there’s nothing you or I can do to stop the trend.  We are loyal soldiers to the great powers in government.  The people of America voted the current administration in, therefore they are a reflection of our own ideals.  We condone tax evasion and two faced politicians because if we didn’t, they wouldn’t have come to power.  This is why America is so great!  There are enough manipulable people out there that so long as you aren’t one of them, you will flourish!

Go USA!

Readers, does it upset you that 41 Obama aides owe more than $800,000 in back taxes?  I mean, that’s only $21,000 per employee, so it ain’t that bad is it?

Do you mind that the government wants to raise your taxes while behind the scenes they try to avoid paying as much as possible?

Do you think Tim Geithner would have paid his taxes if he wasn’t appointed Treasury Secretary and nobody brought it up?

Keigu,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. David M says

    Absolutely it upsets me that Obama aides have not paid there taxes. Hopefully by Monday they will all have paid what they owe, or at least set up payment plans – if this does not occur they should resign or be fired.

    No I do not mind that they want to raise taxes but try to avoid them – unfortunately that is how our tax system works. We spend an incredible amount on money avoiding taxes thru sheltes, loopholes, exemptions, off shore companies, special rules for various industries, ETC. What we REALLY need to do is simplify our tax system. I mean make it real simple – you exclude a few $ from very low wage earners income and tax everything else – at a much lower rate since everything will be taxed. HOWEVER, I realize that unfortunately this is just a dream of mine. There are to many special interests and sources of contributions for politicians for this to EVER happen. This makes me very sad. (So I do not mind that politicians in particular are doing it, however, I absolutely wish that are system was dramatically changed.)

    Would Geithner have paid his taxes had it not been pointed out – almost certainly not. Avoiding taxes (legally or not) is a sport/hobby/pastime whatever you want to call it, for many Americans – sad but true!

      • David M says

        I do not mind them avoiding taxes as long as they are avoiding them legally. Why not that is why our tax system is made so complicated so people can attempt to avoid taxes! I do not hold politician to a higher standard then anyone else in America.

        However, I think politicians and everyone else should pay all taxes they legally/ethically owe. Did you hear about Mr. Heinz (Kerry) the Senior Senator from MA. He said his boat was docked in Rhode Island to avoid $450,000 in sales tax that he would have to pay on his $7,000,000 boat. He is the Senator from MA he should pay sales tax on his boat in MA!

        I think we should have a national sales tax of say 5% and not have each state taxing things a different rates. I know this is a very un-American way to think – however, I see little to no value in the States Rights form of government that we have. I wish we were like Japan we most everything is uniform across the whole country.

        This is just one of the reason I believe we need a MUCH simpler tax system in America.

        However, unlike most people here I do not thinkt he simplied tax needs to be flat. I think we could have multiple brackets that would be substantially lower than the brackets we currently now have.

        • says

          Wow, I haven’t heard of that Kerry story. That is redonkulous!

          I’m all down for a national sales tax of 5%, since it’s 10% here in CA!

          The $1 billion in back taxes owed is basically government officials trying to game the system and do so illegally, but they are getting caught btw.

  2. says

    Argh!!!!! I never should have read this!!! I am so sick of the government right now. Maybe they all walked away from their mortgages too?

    Every time I see Geithner on tv, I want to scream. What a hypocrite. He probably got a bonus so he could pay for his taxes.

    I cannot imagine what would happen to me if I didn’t pay all my taxes. Love these double standards.

    • says

      If you didn’t pay all your taxes, you would be fined, put on a watch list, and never be left alone by the government ever again! But, you may also be appointed to an awesome position like the Vice President of the US if Tim is an example!

  3. Ginger says

    So is this a personal finance blog or political talking points blog? Your ideas presented here are clearly one sided and jaded. Go back to writing about personal finance :-)

      • Ginger says

        Spare me the tea party nutball rhetoric LOL And who said anything about communism? You clearly seem to think you know my political stance. Let me guess, your assumption is based on a few clicks and you think that I want a social welfare free for all? “Folks like me ehh-get over it, we are here to stay LOL

        I think you need to remember that America didn’t belong to you before YOU came here. If YOU don’t like it then go build your own country somewhere in Europe and stay there.

        Again, stick to personal finance.

        • Greg McFarlane says

          So because Indians lived here before Caucasians (and I assume you know Sam’s ethnic background? Because he’s never mentioned it), then Sam has to present multiple viewpoints on his blog? Well, I guess that counts as an opinion, at any rate. At least your grammar was reasonably good.

          So is that the new online protocol: I can say whatever I want, no matter how inflammatory or retarded, but just add an “LOL” or an emoticon and I’m good to go?

          Ginger, you sound pretty hot. And by hot I mean “insane”. :)

      • Ginger says

        You can delete my comments all you want but I am dead on about you LOL. We don’t need to share the same ideals or political thought process but being respectful and *gasp* tolerant of opposing views is something you could probably learn more about. Again, you took a look at my twitter pic/blog/comments and made the assumption that I want a freeballing social welfare system and told me to go find my way to Korea because they practice communism there.

        I wonder, what made you think I would even want such a system here in America? That wasn’t even remotely the point of my original comment. But rabid, intolerant perspectives like yours remind me that even when attempting civil political discourse it isnt always possible because of pre-existing notions about the other side.

        Ill be sure to post this on Twitter just in case you miss and delete it here :-)

        • Nancy says

          Ginger girl, you’re making us women look bad! You make yourself sound stupid by not recognizing that taxes have everything to do with personal finance. Do you not pay taxes, which is why you don’t care about this double standard? Taxes are the single largest personal finance expense of all people in America!

          Your comments make you sound hormonal. Comments are caught in spam all the time, as mine is right now. Why is it if you add a smiley face, Sam can’t as well? If you are going to dish it out, you should be able to get it right back.

          Chill girl and stop making women look bad!

      • Ginger says

        You can delete my comments all you want but I am dead on about you LOL. We don’t need to share the same ideals or political thought process but being respectful and *gasp* tolerant of opposing views is something you could probably learn more about. Again, you took a look at my twitter pic/blog/comments and made the assumption that I want a freeballing social welfare system and told me to go find my way to Korea because they practice communism there.

        I wonder, what made you think I would even want such a system here in America? That wasn’t even remotely the point of my original comment. But perspectives like yours remind me that even when attempting civil political discourse it isnt always possible because of pre-existing notions about the other side.

        Ill be sure to post this on Twitter just in case you miss and delete it here :-)

        • says

          Hi Ginger, just got home. As a new commenter, your comments are captured in Akismet’s spam filter, just like your first comment which I had to unspam. I can’t be online all the time, especially on a beautiful Sunday.

          Feel free to share more of your thoughts as to why you think it’s OK to raise taxes on Americans while avoiding paying taxes. Shouldn’t gov’t officials be held to a higher standard?

          Glad you’re so passionate, although I don’t think I understand yet where you are coming from so please elaborate. Welcome to the site!

          Cheers

        • The Genius says

          Did you say you are a psychotherapist? Because you sound like a complete nut job and need to see one yourself!

          I’ve never seen you around here, but you sure make for good entertainment. Nice one Sam for getting her all crazy and stuff hehe.

      • Ginger says

        Nancy you sound silly. No where do I make any representations that my opinions reflect women as a whole, just like I don’t speak for everyone in my race. Spare me the generalizations. I stand by my original comments sans spam filter issue *shrug*

        Furthermore, if you can actually read and process what I wrote you’ll note that I commented how one sided the article is which was directed to the author. Sam replied that I must like a communist society and therefore should move to N. Korea and I replied to Sam in kind. Im allowed, the last time I checked.

        And who said Sam can’t add a smiley face? o_O Where did I say that?

        • Nancy says

          You sound very insecure frankly. What race are you? How did race get into the topic of conversation? I don’t have an idea, and neither does anybody. Is the reason why you are so upset is because you are from Korea? I’m really trying to understand where your immaturity is coming from. The way I read it, North Korea is just an example of a Communist country gone wrong where people are suffering since there is no reward and only punishment for success.

          Obviously you haven’t been around this site long enough to know that a lot of us are against big government, poke fun at a lot of things, and don’t take ourselves too seriously. You’re in the wrong forum for attacking a blogger without being able to get jabbed at back without going all PMS on us.

    • Investor Junkie says

      Let me put it this way. Taxes ARE part of personal finance. Also the more the government is part of our GDP the more unfortunately we have to talk about it. It becomes politicized because of more government involvement in our economy.

  4. says

    These problems wouldn’t happen if we had sales tax rather than income tax. While we may not capture tax on all value added we would close the loop holes with a consumption tax and minimize the reach of the IRS to businesses (producers) rather than all employees.

    • says

      Correct, live in TX w/ 8.5% tax and no state income tax…halfway there if the fed would change to VAT.

      It needs to be either/or other wise you will get screwed like you do in CA but the great thing about sales tax is it taxes consumption rather than income so you have an incentive to save and if you spend it really is a flat tax (unless the government continues sin taxes which make people pay more for some goods).

      • says

        A sales tax wouldn’t be enough to fund the huge gov’t spending. It’s great that you guys have no state income tax, that’s huge. However, I think I’d rather pay $100,000 in taxes a year to not live in Texas. Sorry, but I need the water, the moderate temperature, and beauty out here.

        • says

          LOL, great point!

          I do have water (about 20 minutes from the Gulf) but the temps are anything but moderate. As a transplant I can certainly understand your comment having come from a region with four seasons.

  5. Charlie says

    I’ll be very curious to see how long it takes for all of those people to pay all the back taxes. It better all come from their banks and not secretly get paid out by our tax dollars!

  6. says

    IMHO, it’s just another argument for going to a flat tax rate! Taxes are too complex with too may weird rules…

    I mean, come on… If Mr. Geithner (who is suppose to be a genius) can screw up his taxes (along with those aids you identified above), the what chance does the average person that wants to become an entreprenuer have of doing it correctly?

    I bet @Everyday Tips is right, Timmmmmmy (South Park reference, hehe) probably did get a bonus to pay his taxes. Grrrrr

  7. says

    I think this is just a symptom of the complete lack of shame in our politicians and their minions. It used to be, when you did something wrong or illegal, you were ashamed. You’d correct it, repent, become a better person. Nowadays, it’s not whether it’s right or wrong, it’s only whether or not it’s illegal. And now that it’s come to light that these people aren’t lawfully paying their taxes, it will be something like “let’s focus on what’s important”, “let’s look forward, not back”. I doubt the administration will even acknowledge the issue publicly, much less address it.

  8. says

    Hey Sam,

    I’ve been so swamped with work that I haven’t had a chance to visit in a couple of weeks. My first free 1/2 day today. I see that you caught that article. I tweeted about it but had no time to express my disgust in a blog post. Glad you did it.

    What was interesting was that the back taxes increased 47% within the past two years. It’s not like these government employees can’t afford to pay taxes. The going rate for a Washington aide starts at $300,000/year for some offices based on what my college roommate confirmed for me. Her husband is high in the Democratic ranks.

    I find it highly ironic that the people who write our tax laws and want to increase taxes do not believe in paying taxes unless they were caught or forced to.

    • says

      Yikes! I had NO idea that a government aide starts at $300,000! I thought their salaries were more like $80-120,000. Thanks for the tidbit.

      I also did not know that the back taxes increased 47% w/in the past two years. WTF! That’s massive hypocrisy. I’m so disappointed :(

  9. Ginger says

    Nancy, I am far from insecure or immature sweets. Frankly, you sound like you’re more bothered by the exchange than I am. Let it go hon, it’s for the best *shrug* People have disagreements on blogs all the time. Time to end this and move on. Pleasantries :-)

      • Ginger says

        No it isn’t. I don’t recall this site nor the comments being the hallmark of scholarly discourse.

        You can call me what you want have at it. At the end of the day you all see more bothered than I ever will be. Keep at it, it serves you well LOL

        • Tiff In London says

          Just one question: Are you lonely? Because it’s easy to see why nobody would want to be with you based on your comments.

          Have a nice day!

  10. Ginger says

    Babes, happily married going on 5 years! Hubby says hi! :-) It’s easy to get nasty when you’ve got nothing else of substance to say which just proves my point. Again, have at it! LOL

  11. says

    I’m all for taxes but EVERYONE has to pay as far as I am concerned. Even the Queen pays tax in UK…. There was a recent scandal with MP’s and their expense sheets but that was party wide and hit the media big enough that most of them had to pay up (the scumbags!).

    There is always an issue of government officials and power they hold leading to some corruption. You either get rid of all guidelines and bring power to people, resulting in less government, or tighten ship and closely monitor government. I know there was a scandal in Sweden over an politician buying a chocolate bar on their account, they hold a very tight ship!

  12. says

    Thank you for writing this post Sam. I feel like the U.S. Government is the giant elephant in the room that nobody wants to acknowledge. By that I mean that everyone knows that there is an astronomical amount of corruption, evasion, excess, and waste that goes on in our government, but that NOBODY wants to begin to deal with it. More taxes, more government workers, will only act to make things worse.

    Think about this: Let’s assume it takes 3 Private employees to pay for 1 government employee’s salary. The government is currently GROWING (16,000+ new IRS jobs due to healthcare reform). By this simple example, in order to pay for those new jobs alone, we need at least 48,000 more private sector jobs. And that’s just to break even…

    • says

      I hear ya man. And I think it’s the responsibility of all personal finance bloggers to expose the hypocrisy to as many peoe as possible! Too many people just blindly follow their leaders. Wake up people!

  13. says

    Not all government employees make the kind of money mentioned in the article and not all government employees don’t pay taxes. Those in the articles are probably some of the exceptions. In fact, majority of the public servants are making much less than their private counterparts.

  14. says

    @Ken @Spruce Up Your Finances

    There are always exceptions, but where I live, bus drivers get paid significantly more than IT workers. Garbage truck drivers get paid at least the same. Something seems wrong with that to me… not only in terms of incentives, but also in terms of justice, as their salaries are funded out of the taxes that the private sector workers must pay.

  15. BD says

    Sure it upsets me. But it doesn’t surprise me. That’s the Dem’s way. They’ll point fingers at ‘the other side’, and claim ‘the other side is greedy and evil’ all while pulling these stunts.
    An interesting aside: My Microeconomics professor admitted earlier today that of the two parties, the Left is much more economically ignorant than the Right.

  16. says

    I came to comment and feel like I’ve stepped into a firefight. :)

    Anyway, my two cents:

    Everyone breaks the law, it just depends to what extent…

    As long as there’s a decent firewall between government and the people, each will look after their own.

  17. says

    This is just more of the same ‘good enough for you, but not for me’ attitude that so many of our politicians and government officials have. It’s there in taxes, in their stance on the environment (They harp on SUV drivers, while driving all over in their own SUVs) and it’s there in their assumption that they know better than us when it comes to what to do with our money. More of the same, and altogether not that surprising.

  18. says

    We must always remember that the best way to effect change is simply to start with ourselves. Like Sam says, our gov’t is a reflection of our society. Don’t like it? Then be different. You can effect change, just quit talking about it and go do it.

  19. says

    I do agree that it is annoying to find out that so many government employees have not paid their taxes. We should lead by example, and it is hypocritical to ask otherwise. If someone can legally reduce their tax bill, yet campaigns to remove those “loopholes,” they are duplicitous at best.

  20. says

    Missed this the first time around (and apparently missed quite a ruckus…), so here we go:

    Readers, does it upset you that 41 Obama aides owe more than $800,000 in back taxes? I mean, that’s only $21,000 per employee, so it ain’t that bad is it?

    Not knowing all the details (it’s well after midnight as I write this, and I’m already staying up later than I wanted tonight), I’m trying not to pass judgment too quickly. Although, at best it indicates that the tax system has gotten way too complex (if it’s messing up high ranking federal employees); at worst, it’s yet another sign of corruption to add to the ‘politicians are crooked’ pile.

    Do you mind that the government wants to raise your taxes while behind the scenes they try to avoid paying as much as possible?

    Alright, (a) I don’t think anyone in government WANTS to raise taxes; that’s the sort of thing that hurts them at the ballot box. I do have more respect for politicians who admit that we can’t cut taxes AND increase spending (or even keep it at the same level), and that if we want to keep funding (and increasing the funding for) Social Security, Medicare, the armed forces, etc, taxes will have to go up; too bad I don’t think anyone on either side is saying that (at least not loud enough). It’s not rocket science. If you want to cut taxes, name some programs you want to cut (in whole or in part), Republicans; similarly, if you want to increase spending, admit that taxes need to rise, either now or in the future, Democrats.

    Back to the question at hand, I also think (b) it’s better to know that the people in Obama’s staff are normal humans who want to minimize the amount they have to pay. Imagine if the Washington Post had found that Obama’s staff overpaid; how likely do you think it would be that we’d get any kind of tax reduction from people who collectively overpaid their taxes by hundreds of thousands of dollars? (This doesn’t mean they shouldn’t be forced to pay up, with penalties and interest; just a view on what this means)

    Do you think Tim Geithner would have paid his taxes if he wasn’t appointed Treasury Secretary and nobody brought it up?

    Probably not. If there was no real penalty, why should he pay? I’d argue that it’s a reason to increase the power of the IRS; if the worst that happened to Geithner was some strongly worded letters, why would he (or anybody, really) feel threatened? I’d go a bit further and recommend annual audits of everyone even loosely connected to the federal government; besides keeping them honest, it might help them to realize what a pain in the ass the federal tax system has become, and perhaps try to really reform it. But then, maybe I’m just a dreamer…

  21. says

    reading these comments is quite apparent how the dems are and who the republicans are. Stop drinking the koolaid and realize that it’s not bush vs obama, its those who have vs those who have nothing.

  22. says

    After seeing other countries, I’d say giving those in power a few extra benefits (e.g. 21K in back tax avoidance without outright illegal avoidance) is probably enough motivation to keep corruption down to noise levels.

    It’s countries where government workers seemingly have low/average salaries/benefits where corruption runs rampant. Sure the reports says they only make $1/year but just to get them to do their jobs then requires handing them some cash under the table. From an American perspective, we would go “let’s fry their butts” but the reality is when those in power feel like they don’t have enough power, the entire establishment steals left and right. You can’t even begin to chase down anybody down.

    It’s not fair of course but life is not fair. We have to make do with least damaging. Shrug … this is the United States in decline. Only hope is for a World War 3 to severely damage the infrastructure in Europe and Asia so America can once again jump into the vacuum.

  23. says

    Well, it’s a common problem in every country, who’s paying taxes and who’s not. However paying taxes whether you are a government employee or an employee from a private company it is important that we abide the law.

  24. LISA THOMAS says

    WHAT MAKES THE GOVERNMENT THINK THAT THEY ARE ABOVE THE LAW?? PRESIDENT OBAMA OR ANY PRESIDENT BEFORE AND AFTER COULD MAKE THEM PAY THEIR TAXES OR JAIL TIME LIKE OTHER TAX PAYERS. THE GOVERNMENT HAS TO LEAD BY EXAMPLE. PERSONALLY, THERE ARE TOOOOO MANY PEOPLE IN GOVERNMENT. IT NEEDS TO BE SIZED DOOOOWWWNNNN!!!! BULL CRAP IS KEPT UP SO THERE’S SOMETHING TO TALK ABOUT.

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