Before Timothy Geithner became the Treasury Secretary, he worked for the International Monetary Fund (IMF). The IMF employs people from all over the world, including Americans. While working there, foreigners don’t have to pay US income taxes, and in an attempt to be fair to the Americans who also work there, the IMF pays the Americans for their share of income taxes.
This doesn’t mean that Americans are exempt from paying taxes in the US. This is a minor detail that Timothy Geithner missed during his tenure with the IMF. Because of the fact that the IMF didn’t pay taxes on his behalf, he was considered an independent contractor, or self-employed. Under the US tax law there is a concept of self-employment taxes, where the individual is both the employer and the employee for all intents and purposes. This means that they have to pay the employer and employee portions of payroll taxes.
Not only didn’t Geithner pay his self-employment taxes, the IMF reimbursed him for what he should have paid had he been a law abiding citizen like the rest of us.
It turns out that this isn’t the last time that Secretary Geithner followed laws as if they were a suggestion, rather than the rule. Turns out that all of the bailout money being paid out by the billions is unconstitutional as well.
Article I Section 9 of the US Constitution states that “No money shall be drawn from the treasury, but in consequence of appropriations made by law…”. This isn’t just a minor point the founding fathers decided to throw into the Constitution.
Secretary Geithner got around this Constitutional issue when the Emergency Economic Stabilization Act of 2008 was passed. According to a report by the Congressional Budget Office, this established the Troubled Asset Relief Program, or TARP as it has become more popularly known. This authorized “the Treasury to purchase $700 billion in assets to alleviate the crisis in credit markets”.
Essentially, this gave him a blank check to hand out $700 billion to “stabilize” the economy. A stabilization effort, which will take years to pay back if any of the bailed out companies go under.
Isn’t it nice of him to hand out our taxpayer dollars when he isn’t even willing to pay his own fair share?
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