He took the money … and kept it

President-elect Barack Obama's designee for treasury secretary, Timothy Geithner, faces questions about how he could have "forgotten" to report and pay more than $32,000 in self-employment taxes when he worked for the International Monetary Fund from 2001 to 2004.

This is a separate matter from his unrelated (if all too familiar) "nanny problems" -- stemming from tax code provisions that should be taken out and shot.

Perfectly average Americans can find themselves handing money to a baby sitter or yard-mower who doesn't seem to speak very good English. The idea that such average Joes or Janes should act as immigration enforcement officers, or have an intimate familiarity with the laws concerning withholding of employment and Social Security taxes, is ridiculous.

Nominees sunk since 1993 by unpaid taxes and immigration violations (usually related to household help) include Bill Clinton's first nominee for attorney general, Zoe Baird, whose case gave rise to the term "Nannygate," as well as Clinton's second choice for attorney general, New York federal Judge Kimba Wood.

Other nominees who crashed on the rocks of the nanny laws include George W. Bush's labor secretary nominee, conservative commentator Linda Chavez; and Mr. Bush's 2004 nominee for homeland security secretary, former New York police commissioner Bernard Kerik.

Laws that impose tax reporting and payment obligations on everyday Americans because they happen to hand some money to a nanny, babysitter or yard-mower are absurd. But Mr. Geithner's non-payment of $32,000 on his own earnings are of a very different order. As National Review White House correspondent Byron York has reported, Mr. Geithner "accepted payment from the IMF as restitution for taxes that he had not, in fact, paid. ...

"The IMF took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. ... IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a 'gross-up,' to cover those tax payments. At the end of the tax allowance form were the words, 'I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.' Geithner signed the form. He accepted the allowance payment. He didn't pay the tax. For several years in a row."

"It was my experience that executives who receive reimbursements on a grossed up basis are keenly interested if the amount they have received will indeed make them whole," writes Rosslyn Smith at Americanthinker.com. "Receiving payments on a grossed up basis is not something that just slips one's mind when preparing an income tax return."

If Mr. Geithner does indeed show signs of adherence to Leona Helmsley's doctrine that "only the little people pay taxes," that could be a legitimate reason to block him from running the Treasury ... and the IRS.