Fay Vincent, former corporate CEO and Major League Baseball commissioner, lives in Vero Beach.
Shortly after I began my first job in the early 1960s as a young lawyer in a New York law firm, a senior partner summoned me and told me he needed a lawyer. With chagrin, he told me a woman housekeeper he employed for about 30 years had recently retired. He showed me a letter he had just received from authorities, asking him to document the Social Security taxes he had paid for her account.
Of course, he had never paid any such taxes, and when she applied for her benefit, federal officials learned of his failure. My assignment, he ruefully explained, was to determine how he should respond to the feds. I quickly did the appropriate research and returned to his office with the news that he owed many thousands in taxes and interest and had no legal basis for refusing to pay.
I never forgot his embarrassment. I also vowed never to make a similar mistake.
I am regularly surprised by the number of successful people who somehow have persuaded themselves Social Security taxes do not have to be paid for household help. My guess is the number of otherwise solid citizens who cheat on this form of taxation is enormously high. I dare you to ask your neighbors, relatives and even adult children how they regard such taxes and you will soon learn the extent of the problem.
The reciprocal of the problem is the number of people — usually women — who have worked for years for those like the senior partner in my old law firm only to discover when they seek to collect their old age pension that there is no earnings record of their employment, so they are out of luck.
Of course, some of these workers have also been cheating on their own taxes by failing to report the cash they have been paid under the table on which neither income nor Social Security tax have been withheld. The number of unfortunate older people who end up with little or no access to the Social Security system has got to be huge, but how can one be certain of the statistics when this underground economy remains submerged?
What bothers me is the obvious hypocrisy on the part of all the good-hearted citizens who would not think of stealing from their household employees. They do not regard themselves as doing anything seriously wrong. To them the household tax is a silly burden with no redeeming benefits.
These people do not stop to think that they are not just cheating the federal government, but their employees as well. The real victims are the very employees or "nannies" entrusted to raise the family children. The real victims are the women — and some men — on whom the family household depends for all the countless tasks central to modern life.
The employers are often the women who manage the household but who find the quarterly tax returns a great nuisance to be disregarded in the press of more important duties. And the risk of getting caught is slim.
There are other risks in not paying these taxes. Remember the two high-ranking women nominated by President Bill Clinton to serve as attorney general who had to withdraw their candidacies after having been found not to have paid taxes for nannies or undocumented household employees? One was even a sitting federal judge; the other was a senior business executive. They paid a price for their disregard of these taxes.
In some part, these Social Security taxes are grounded in turgidly expressed laws and regulations. Many household employers are ignorant of the law; others may have some idea of the tax requirements but rely on the total lack of enforcement mechanism. Some may believe they will pay when they are asked or directed to do so. But no one has explained to them the harm they are causing down the road to the employees they often claim to value highly.
Politicians are lyric in their praise for the benefits of our Social Security system, and properly so. One wonders, however, how many members of Congress would openly submit to confirming their adherence to these household taxes. Here is the new example of a situation best captioned — "don't look and don't tell."
Fay Vincent of Vero Beach is a former corporate CEO and commissioner of Major League Baseball.