We start today with a follow-up to last week’s column, in which I wrote, “Timothy Geithner won approval as Secretary of the Treasury, despite the fact that he’d failed to pay enough tax in 2001, 2002, 2003 and 2004.  Do we need any more evidence that our tax code is too complicated?  Simplify, simplify, simplify, and let thousands of CPAs and tax lawyers and lobbyists find productive work.”

In response, D.T. from Alaska wrote, “You are assuming or maybe concluding that Timothy Geithner did not knowingly cheat on his taxes.  With the plethora of examples in the media (and several you gave) of politicians knowingly partaking in illegal acts why would you conclude otherwise with Timothy Geithner?”

And M.M. from Washington, D.C., wrote, “I absolutely agree that the tax code should be simplified. Your comment about Geithner’s tax issues was however beside the point. Geithner worked for the IMF. U.S. citizens working for the IMF, the World Bank, the UN and many other organizations have identical obligations in respect of Uncle Sam, notably in relation to the self-employment tax. And because those obligations are identical, all organizations go out of their way to make sure that employees comply with them. Failure to comply with those obligations is a cause for immediate termination–and quite a few U.S. citizens who were employees of those organizations have found that out the hard way.

“U.S. citizens who have to pay the self-employment tax get an allowance (usually paid up-front) for that tax from their employer. Each organization makes each employee claiming that allowance sign a one-page notice with lots of big letters in bold characters to the effect that they know/get/understand/fully understand/are 100% clear about their obligation to pay self employment tax to Uncle Sam.

“If Geithner was too dumb to understand that form–which he would have had to sign once a year while at the IMF–it is frightening that he is in charge of the Treasury. If he understood the form, but ignored it anyway, it is possibly even more frightening because the problem then would not be intelligence.”

M.M. appears to know whereof he writes and I will not quarrel with that.  In retrospect, I should have said more clearly that I refrained from judging Geithner either guilty or innocent of stupidity or willful tax evasion.  The politicians in Washington wanted him.  They got him.  He paid his taxes plus interest (no fines).  And that case is closed.

My point was that if the tax system were dramatically simpler, it would make not only the filing of taxes more efficient but also the catching of cheats.  Furthermore, it would give tens of thousands of people the opportunity to go out and find employment in industries that actually produce something of value.

Since then, we’ve had Tom Daschle, who failed to pay roughly $128,000 in back taxes, and when caught, explained, “All of my life I assiduously tried to pay my taxes in full and on time. … I deeply apologize.”  It didn’t help; after days of scrutiny, he withdrew from consideration for the head of the Department of Health and Human Services.  Less prominent was Nancy Killefer, who withdrew her name to be the first “chief performance officer” for the federal government, also citing tax errors.

Now, the cynic might say that if the IRS just took a close look at the last 10 years’ tax returns of everybody in the Federal government it would scare up enough revenue to close the budget deficit by a few percentage points.  Me, I’ll just repeat and elaborate on my main point.  The tax laws are too complicated.  Every new program, gained by earnest lobbying, that aims to fine-tune the system to benefit or penalize specific groups, only serves to make the whole process more complicated, and thus less efficient, for both the taxpayers and the overseers.  And that helps nobody but the people employed in the tax industry.