Daschle Drops Out

February 3, 2009 (PLANSPONSOR.com) - President Barack Obama's choice to spearhead U.S. healthcare reform withdrew his nomination as Secretary of Health and Human Services.

Former Senator and one-time Senate Majority Leader Tom Daschle said he did not want to become a “distraction” after errors forced him to pay $140,000 in back taxes. Obama said in a statement that he accepted the decision “with sadness and regret.” As recently as Monday Obama said he “absolutely” backed Daschle for the post. Daschle had been nominated by Obama in December (see Obama Nominates Daschle for Health and Human Services Post ).

Daschle’s problems were outlined in a statement from the Senate Finance Committee, which was due to hold hearings regarding Daschle’s nomination next week, “Senator Daschle told staff that in June 2008, something made him think that the car service might be taxable and disclosed the arrangement to his accountant. Senator Daschle estimated that he used the car and driver 80 percent for personal use and 20 percent for business use. On January 2, 2009, Senator Daschle filed amended returns for 2005, 2006 and 2007 reporting the value of the car service as income.”

Daschle’s withdrawal came shortly after Nancy Killefer, the President’s nominee to become the first U.S. “chief performance officer,” also dropped out because of tax questions (specifically a $946.69 tax lien on her home related to the nonpayment of employment taxes for household help). Killefer said she did not want her problems to create “distraction and delay.”

She was the third Obama nominee to have tax problems, following Daschle and Treasury Secretary Timothy Geithner, who was approved by the Senate, despite some questions raised about his payment of taxes over a period of years.

All of which has apparently led Congressman John Carter (R-Texas) to introduce new legislation, the Rangel Rule Act of 2009, HR735. Carter’s bill calls for the elimination of all IRS penalties and interest for paying taxes that are past due – and yes, it is named for Congressman Charles B. Rangel, who has had tax problems/questions of his own. “The proposal includes a provision whereby taxpayers could escape the assessment of penalties by writing on their tax forms “Rangel Rule.”