Back in the late ’80s, Leona Helmsley was brought to trial and convicted of multiple tax violations. During the trial a former housekeeper, Elizabeth Baum, testified that she heard Helmsley say, “We don’t pay taxes. Only the little people pay taxes.” Helmsley denied having said that, but she will own that quote for as long as she is remembered.

And I remembered that quote when I read a distressing news report out of the Los Angeles Times this morning:

But we do know that as of the end of 2009, 41 people inside Obama’s very own White House owe the government they’re allegedly running a total of $831,055 in back taxes. That would cover a lot of special chocolate desserts in the White House Mess.

In the House of Representatives, 421 people owe a total of $6,524,892. In the Senate, 217 owe $2,774,836. In the IRS’ parent department, Treasury, 1,204 owe $7,670,814. At the Labor Department, where Secretary Hilda Solis’ husband had some back-tax problems before her confirmation, 463 owe $7,481,463. Eighty-one workers for the Federal Reserve System’s board of governors owe $1,076,733.

Over at the Justice Department, which is so busy enforcing other laws and suing Arizona, 1,971 employees still owe $14,350,152 in overdue taxes.

Then, we come to the Department of Homeland Security, which is run by Janet Napolitano, the former governor of Arizona who preferred to call terrorist acts “man-caused disasters.” Homeland Security is keeping all of us safe by ensuring that a Dutch tourist is aboard every inbound international flight to thwart any would-be bomber with explosives in his underpants.

Within that department, there reside 4,856 people who owe the tax agency a whopping total of $37,012,174.

And why should they worry about paying their taxes when the department in charge of gathering taxes is led by Secretary of the Treasury Timothy “Oh, you mean this $42,000 in unpaid taxes” Geithner?

As one of the little people who pays his taxes on time and in full, I object to having thousands of tax scofflaws in government. They are not our betters; they work for you and me, and they should obey the same laws we do. Anyone who can’t should be fired immediately and see what it’s like to work in the real world.

Here is the fourth of my posts inspired by an editorial cartoon this week. Today’s was drawn by Lisa Benson.

Bush's tax cuts expiring

The tax cuts that President Bush pushed for are slated to expire January 1st, 2011. And for many Americans, it means a tax hike. You can calculate and see if that’s the case using this handy form from the Tax Foundation. I did a quick test and found out that I’ll be coughing up almost $2,500 more if the tax cuts go away. I don’t know about you, but $2,500 is a bunch of money!

But there is something else worth considering. Bush’s tax cuts have and will affect the overall economy. The tax cut law was signed by President Bush on May 28, 2003, and the effect was quickly seen. The GDP growth for the second quarter of 2003 was 1.10%, but in the third quarter, with the tax cuts in effect, the GDP growth was 2.25%. GDP growth more than doubled, thanks to cutting the top rates people had to pay. Also interesting is the growth of private investment before and after the tax cuts. The private investment rate two quarters before the tax cuts kicked in were 0.61% and 0.42% while the two quarters afterwards were 3.96% and 4.50%. When people realized they could keep more of their hard-earned money, they were willing to invest it in the economy. Since the tax cuts had been heavily debated for a while before their passage, it’s very possible that many businesses and investors held off purchases and big spending until after the tax cuts kicked in.

Let’s take a look at where we are now. We are almost a mirror opposite of 2003. Instead of anticipating tax cuts and postponing activities, businesses are anticipating tax increases and hurrying to do what they can to earn before the taxes go up. As I see it, the rush by businesses and investors to get while the getting is good is boosting this weak economy. Once President Bush’s tax cuts expire, there won’t be nearly as much effort to work for less. I see a deeper recession if the tax cuts expire, and I’m not the only one seeing it.

“In a worst-case scenario, allowing the Bush tax cuts to expire and failing to fix the AMT could result in (1.5 percent) of fiscal drag in 2011 on top of the 1 percent fiscal drag we expect to occur as the Obama fiscal stimulus package unwinds,” Deutsche said in a note to clients. “If the recovery remains soft/tentative through early next year, this additional drag could be enough to push the economy to a stalling point.”

The opinion runs counter to that of Treasury Secretary Timothy Geithner, who said earlier this week that allowing the cuts to expire would not cause the economy to re-enter recession. The administration has proposed letting most of the tax cuts stand, but eliminating the ones for the top-tier earners.

Deutsche compared the situation to Japan in the 1990s, when the government let tax cuts expire and cut stimulus, leading to another leg down in the recession and ensuring the nation’s “lost decade” of no economic growth.

Our Treasury Secretary Timothy Geithner says that letting the tax cuts expire wouldn’t cause the economy to re-enter a recession. And government said that the multi-billion dollar stimulus would hold unemployment at 8%, but we are sitting at 9.5%. The administration doesn’t have a good record when it comes to foreseeing the results of their actions. Heck, our Treasury Secretary has a hard enough time just paying his own taxes.

How could we get out of our current recession? I have a plan that would do so in just three easy steps. But Congress would never do it because it means reducing their power. And they can’t have that.