Lessons Learned from the Tom Daschle Tax Fiasco


Daniel J. Mitchell

The Tom Daschle imbroglio is instructive on several levels. From a policy perspective, it is an indictment of a convoluted tax code that simultaneously hinders compliance by honest people and enables cheating by dishonest people.

In past years, Money magazine asked professional tax preparers to estimate the tax liability for a hypothetical family. Almost without fail, every single answer the magazine received was different and every single answer was wrong. If people trying to come up with the right answers have this much trouble, imagine the opportunities for mischief by those who want to scam the system — especially now that the tax code is even more complex?

From a personal perspective, it is well nigh impossible to rationalize Mr. Daschle's dodgy behavior as a series of honest oversights. If he had a friend who lent him a car and driver periodically, that would be a gray area and a failure to report in-kind income would be understandable. The failure to report the full-time provision of a luxury automobile and chauffeur, by contrast, stretches credulity to the breaking point. Failure to report more than $80,000 of consulting income also does not pass the smell test.

But perhaps the most instructive element of Mr. Daschle's tax dodging is that it reveals how the political culture in Washington is fundamentally corrupt. As a senator, he constantly voted to expand the size and scope of government, and he expected the rest of us to pay the bills, stating in 1998 that, "the I.R.S. should enforce our laws to the letter." Yet like Treasury Secretary Geithner and Charles Rangel, chairman of the House Ways and Means Committee, Mr. Daschle viewed compliance as optional.

Unlike ordinary Americans, Mr. Daschle and other members of the political class will not have to worry about being harassed by the I.R.S. Washington insiders have a get-out-of-jail-free card that enables them to feign embarrassment, pay the back taxes and interest, but avoid any penalties or legal consequences. Best of all, they also can generate campaign contributions while in office and become rich out of office by making the tax code even more onerous for the rest of us.

Nice work if you can get it.

The Cato Institute



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