There is no question that people are fallible and we all can and do make mistakes, and tax returns are no exception. The test of character, I believe, is not necessarily whether one makes mistakes, but how one responds after discovering the mistake.
In this situation, it appears clear that Daschle knew in June 2008 that he had erred in not making tax payments on the massive gift of a car and chauffeur that was provided by a hedge fund. Assuming, for now, that it was simply an innocent mistake, what should he have done?
Had he truly been sorry about the mistake and sincerely wanted to correct the damage, he should have immediately filed an amended tax return and paid the back taxes and interest. But the fact is that he did not pay his back taxes until January 2009. Given those seven months of knowing about the error but not fixing it, I cannot view this as an innocent mistake for which Daschle has expressed adequate regret and for which he has taken full responsibility.
We are talking here about approximately $140,000 of tax liability, not $140,000 worth of unreported income. That’s more tax liability than the total annual income of 85% of the population. The cavalier and nonchalant attitude that Daschle showed, after being aware of his mistake, is inappropriate for a public policy maker and it is that attitude, rather than the mistake itself, which I believe disqualifies him from service as the head of a federal agency.
Daschle's letter, in which he withdrew himself from consideration for the position, was hardly an adequate expression of responsibility, as he implied that the reason for his withdrawal was not his lack of qualification for the position due to his failures, but simply the fact that the situation would cause a distraction. Daschle's statement did not even acknowledge that he had done anything wrong and did not express regret about not having paid his back taxes immediately upon finding out that he had made a mistake on his tax returns.
Whether Daschle should have known about his tax liability is also a valid question. It is not like Joe the plumber forgetting to pay a tax on a gift he had received. Daschle actually served on the legislative committee that oversees federal tax policy. You would think that he would know a little something about tax laws. In fact, even I - a tax policy novice - am well aware that large gifts of money or in kind service such as the provision of a limousine and chaffeur from a company represent taxable income. And if $140,000 in tax liability was at stake, you can be sure that I would have asked my accountant about it if I had any doubts when preparing my initial return.
Politicians who are asking us as American citizens to pay high proportions of our income in taxes should have a greater respect for the payment of taxes themselves. Their wealth gives them a greater obligation to understand and comply with tax laws. I cannot accept this as simply an innocent mistake in the first place.
Even Daschle's admittance of his error seems insincere. He apparently characterized his failure to pay the taxes as "completely inadvertent." But available evidence appears to show that he failed to pay the taxes for about six or seven months after finding out that he owed the tax. Six months of inaction or delay can hardly be called a "completely inadvertent" mistake. What was he doing during that six-month period? Vacationing with the webmaster of Breathe California of Sacramento-Emigrant Trails?
More than anything, I think this episode shows a disrespect for the average, hard-working, tax-paying American, who despite a lack of resources and trying financial times, is still honest and law-abiding and conscientious about paying his or her taxes promptly and accurately. It is that lack of respect - not any distraction - that is the real reason why Daschle needed to step down.