Hatch says campaign aides not employees

For his paid campaign aides, who all earn between $2,500 and $10,000 a month, Sen. Orrin Hatch has never withheld any income tax, nor withheld and paid Social Security and Medicare taxes, nor paid unemployment taxes.

Why? His campaign contends they are not really employees. It says they are consultants, or essentially independent contractors who must handle their own taxes. Of course, that saves the campaign money, potentially at the cost of other taxpayers.

Laws about when workers are employees or can be considered contractors are rather murky, but Rep. Jim Matheson, D-Utah, for example, deems his aides who do similar paid campaign work as true employees, and he withholds and pays taxes for them.

Rep. Chris Cannon , R-Utah, Democratic Senate candidate Pete Ashdown and GOP 2nd District House candidate LaVar Christensen consider some workers to be employees and some as contractors. Meanwhile, Rep. Rob Bishop, R-Utah, and Democratic 3rd District House candidate Chris Burridge list no paid workers on disclosure forms.

Only Democratic 1st District House candidate Steve Olsen, like Hatch, also considers all paid workers as consultants — but he has just one such worker.

Paying or avoiding payroll taxes can make a big financial difference in campaigns. For example, Jon Canchola, the campaign manager and only paid employee for Olsen, acknowledges, "If we paid payroll taxes, it would kill the campaign. We have a small budget."

Matheson paid $14,390 in payroll taxes from January 2005 through June 2006, about 5 percent of his overall spending then. Cannon spent $8,499 on such taxes in the period, about 1 percent of his spending.

Hatch, who has a well-funded war chest, doesn't face the problem of tight finances, and paying payroll taxes likely would not dent his campaign. He has raised $4.5 million for this election and had $2.5 million in the bank at the end of the last reporting period in June — and that did not count the $350,000 or more he is estimated to have netted from a fund-raiser last month with President Bush.

Dave Hansen, Hatch's campaign manager (who is paid $10,000 a month and is considered a contractor), said the decision to deem all employees as contractors was made "because our accountant told us that we could. He's the expert, not us."

In contrast, Matheson said his campaign accountant, who is also a tax attorney, advised him to deem similar workers as employees. "I also believed it was the right thing to do," he said. "I've always thought of them as employees, and that's how you handle it."