Inman says he didn't pay taxes for housekeeper

December 21, 1993|By Carl M. Cannon and Richard H. P. Sia | Carl M. Cannon and Richard H. P. Sia,Washington Bureau

WASHINGTON -- In another instance of a problem that has plagued the Clinton administration for a year, the White House acknowledged yesterday that Defense Secretary-designate Bobby Ray Inman did not pay Social Security taxes for a part-time housekeeper he and his wife have employed since 1986.

Mr. Inman paid some $6,000 in back taxes yesterday, and any additional fees in the form of penalties or interest would be

calculated by the Internal Revenue Service, White House officials said.

Communications Director Mark Gearan also said that Mr. Inman had informed President Clinton of this situation before being selected last week to replace Les Aspin at the Pentagon.

Neither White House aides nor key Senate officials thought this disclosure would be fatal to Mr. Inman's confirmation, but the revelation comes at a time when questions are being raised about the former admiral's business acumen.

Although both the president and Mr. Inman touted his 1980s private-sector experience as a solid qualification for the top Pentagon job, that experience included helping lead one Fortune 500 company, defense contractor Tracor Inc., into bankruptcy.

The issue of paying taxes for domestic help -- an issue most Americans have never thought of -- came up in January when it was learned that Zoe Baird, a corporate attorney tapped by Mr. Clinton for attorney general, had hired illegal aliens to care for her child -- and failed to pay their Social Security taxes.

At first, no one in the administration or on Capitol Hill seemed to understand the message this sent to everyday Americans. Ms. Baird said that her husband had handled the matter -- and that he had been given bad legal advice -- which seemed to satisfy official Washington.

But Ms. Baird's $507,000 annual corporate salary and the fact that the job in question was the nation's top law enforcement post made ordinary Americans unsympathetic, even indignant. When this finally registered at the White House, her nomination was pulled even as she tried desperately to defend herself before the Senate Judiciary Committee.

Mr. Clinton next settled on U.S. District Judge Kimba Wood for attorney general, but she was dropped like a hot potato when the White House learned that she and her husband had hired an illegal immigrant -- even though that wasn't illegal to do at the time and even though the couple did pay all the required Social Security taxes.

The two cases were front-page stories from coast to coast and sent well-to-do Americans scurrying to their accountants and tax lawyers. But apparently not Mr. Inman, who waited until yesterday to pay his back taxes.

The Zoe Baird case forced other Clinton appointees to straighten out their tax records last winter. Two Cabinet officers, Secretary of Commerce Ronald H. Brown and Transportation Secretary Federico Pena, paid back taxes after revealing that they had not paid Social Security taxes for domestic workers.

They were already on the job. But two who were not didn't fare so well.

Washington lawyer Charles Ruff, under consideration for one of the top three jobs at the Justice Department, and U.S. Appeals Court Judge Stephen G. Breyer -- a finalist for the U.S. Supreme Court -- were passed over, at least in part, when White House aides revealed that they had "Zoe Baird problems."

By the time Judge Breyer was passed over, embarrassed congressional leaders had seen enough: The violations were getting progressively more technical and trivial. Judge Breyer, for instance, failed to pay Social Security taxes for an 81-year-old Irish woman who was already drawing Social Security benefits and who came into his house one or two mornings a week to bake cookies, chat and do a little light cleaning.

But the law requires employers to pay Social Security and Medicare taxes for anyone who is paid more than $50 in a calendar quarter, regardless of whether that person is a professional house cleaner or a kid down the street who cuts the grass.

Even the notoriously literal IRS has acknowledged that the law, enacted in 1950 when a $50 threshold seemed high enough, is more often ignored than obeyed.

Pledging to bring the law up to date, Senate leaders assured the White House earlier this year that they would not consider such ** tax problems to be a disqualification so long as the nominee voluntarily disclosed the liability and agreed to pay back taxes.

Thus, this issue would not seem to be a problem for Mr. Inman, except for one large, looming question: Why, in the face of all the publicity about this issue, did Mr. Inman wait until after he was nominated to begin paying his taxes?

"He'll have to answer that at his confirmation hearing," said one ,, senior White House official. "I do not know."

The Clintonites were not the only ones put in an awkward position by the Inman revelations.

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