Trump's Budget Director Nominee Has Tax Issues

President-elect Donald Trump’s choice to be his White House budget chief has a tax problem.

Representative Mick Mulvaney, the nominee for director of the Office of Management and Budget, told a Senate committee that he had failed to pay more than $15,000 in taxes for a household employee in the early 2000s. The voluntary disclosure came in response to a query that has become standard for presidential nominees seeking Senate confirmation: Have you ever failed to pay your taxes?

“I have come to learn, during the confirmation review process, that I failed to pay FICA and federal and state unemployment taxes on a household employee for the years 2000-2004,” Mulvaney wrote as part of his response. He said that he had since paid some $15,583 to the Internal Revenue Service in back taxes, but that the amount he owed in state taxes and possible penalties or fines was still being determined. 

In the past, such disclosures have imperiled the nominations of high-level presidential picks—most memorably in 1993, when Zoë Baird, President Bill Clinton’s nominee for attorney general, was forced to withdraw amid revelations that she had hired an illegal immigrant as a nanny and failed to pay the requisite employment taxes. In 2009, tax issues embroiled two of President Obama’s nominees, Timothy Geithner for treasury secretary and Tom Daschle for health and human services secretary. Geithner eventually won confirmation, but Daschle withdrew. The taxes he owed, however, totaled about $140,000—nearly 10 times more than the total Mulvaney reported underpaying.

Senator Charles Schumer, the Democratic leader, suggested that Mulvaney should face the same fate as Daschle and withdraw his nomination. “I’ll say to my Republican colleagues on the other side of the aisle: What’s good for the goose is good for the gander,” he told reporters after Mulvaney’s disclosure came to light. Geithner’s issue involved Social Security taxes he did not pay while working at the International Monetary Fund

Whether Mulvaney’s nomination is actually in jeopardy, however, is unclear. Republicans can confirm him on a straight party-line vote, and leading senators on Wednesday said they would wait until he testifies before the Senate Budget Committee next week before making a judgment. Senate Majority Leader Mitch McConnell declined comment, as did Senator Mike Enzi, chairman of the budget committee.

The Trump transition team mounted a vigorous defense of Mulvaney, noting that Democrats like Schumer rushed to Geithner’s defense eight years ago. “In typical partisan attack dog fashion, Senator Schumer has proven himself a complete hypocrite,” Trump spokesman John Czwartacki said in a statement. He continued:

“The fact of the matter is that nobody is more qualified and more prepared to fight to rein in Washington spending and fight for taxpayers than Mick Mulvaney. Congressman Mulvaney raised the issue surrounding the care of his premature triplets immediately upon being tapped for this position, and has taken the appropriate follow-up measures. President-elect Trump fully stands behind Rep. Mulvaney and looks forward to his efforts to help make America great again.”

First elected in 2010, the South Carolina Republican is one of the most conservative members of the House and has fought over spending and deficits with party leaders like former House Speaker John Boehner. The transition team said Mulvaney had hired a woman to help take care of his newborn triplets and “believed she was responsible for paying all applicable federal and state taxes.” When filling out paperwork last month to serve in the Trump administration, however, he learned they had been wrong and the woman should have been classified as an employee of the family. Transition officials noted he voluntarily disclosed the issue to the Trump team and the Senate, and they said he was awaiting word from the IRS on what additional penalties or fees he might owe.