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Tax Issues Tie Up Washington

Tax issues prompt Tom Daschle, President Obama's nominee for secretary of Health and Human Services, and Nancy Killefer, the nominee for chief perf...
Kate PlourdFebruary 3, 2009

Citing personal tax issues as the reason for their decisions, two of President Barack Obama’s nominees for prominent posts in his administration withdrew their candidacies Tuesday.

Just hours after Nancy Killefer, the former Treasury department CFO who President Obama appointed chief performance officer of the federal government withdrew her name, former South Dakota senator Tom Daschle announced he would pull out his nomination as secretary of Health and Human Services.

In separate statements, both Killefer and Daschle said that their personal tax issues were distracting from the president’s agenda. President Obama promptly accepted both nominees’ decisions.

“I think they both recognized that you can’t set an example of responsibility but accept a different standard” for those who serve, said White House press secretary Robert Gibbs at a White House press briefing Tuesday.  “They both decided and recognized that their nominations would distract from the important goals and the critical agenda that the president has put forward.”

Tax issues have surfaced for three presidential nominees. Treasury secretary Timothy Geithner was confirmed by the Senate in January despite failing to pay $34,000 in income taxes in the early years of this century.

Daschle’s tax issues stem from a recent amended filing in which he paid more than $140,000 in back taxes for the years 2005 through 2007. Upon Killefer’s nomination last month, reports surfaced that the department of employment services in the District of Columbia filed a $946.69 tax lien on her home for her failure to pay unemployment compensation tax on household help in 2005. The fine included a $600 penalty in addition to the $298 in unpaid taxes and $48.69 in interest. 

Killefer currently leads McKinsey & Company’s public-sector practice as a senior director. During her term as the Treasury department’s finance chief she led a major modernization of the Internal Revenue Service, and helped redesign Treasury’s management process. She was also appointed by former President Bill Clinton to serve on the Congressionally-established IRS Oversight Board, formed after taxpayer mistreatment scandals surfaced in the 1990s.