Opinion: Tax filing regrets?

Two very rich, very public men probably wish they could go back and revise their tax filings. One has major legal problems; the other is in serious political trouble. L. Dennis Kozlowski, the former chief executive of Tyco International, and Mitt Romney, the Republican candidate for governor of Massachusetts, have little in common except that both are being accused of tax avoidance. Kozlowski is charged with doing it illegally; what Romney did was legal, and there would be no fuss about it if he weren't running for governor.

Kozlowski has been indicted on charges that he evaded sales tax on millions of dollars in fine artworks he purchased for his 13-room Fifth Avenue apartment in New York. He allegedly bought paintings worth $13.1-million that included works by Renoir and Monet. To avoid paying sales tax on the purchases, he pretended to ship them to company headquarters in New Hampshire, but actually sent empty crates. All told, he is alleged to have evaded $1-million in sales taxes.

Romney, a wealthy businessman who is credited with the success of the 2002 Winter Olympics in Utah, has jeopardized his Massachusetts candidacy by claiming for tax purposes that his primary residence during 1999 and 2000 was in Utah. The Massachusetts Constitution requires gubernatorial candidates to have lived in the state consecutively for the past seven years. Romney also admits he saved $54,000 in property taxes by claiming as his primary residence a $3.8-million home in Park City, Utah. Part-time residents have to pay taxes on the entire assessed value of their homes while full-time residents pay taxes on only 55 percent of the value.

This discrepancy, uncovered by a newspaper in Utah, has thrown Romney, until now a shoo-in, on the political defensive. He claims the "primary residence" designation was a clerical error and the reason he didn't correct the error when he received his tax bill is that it went to his wife. The local tax assessor says for two of the three years Romney has lived in the Utah house, he paid the tax bills. Romney has also filed amended state tax returns in Massachusetts for the years 1999 and 2000 in order to claim full-time residency.

Romney's attempt to explain his tax filings has only made things worse. He has made contradictory statements that have given Democrats an opening to question his honesty. He may go on to win the governorship, but for the moment the controversy has taken some of the wind out of his sails.

For Kozlowski and Romney, the money saved in taxes was pocket change relative to their net worth. If he is acquitted of the charge, Kozlowski could still wind up paying out more in legal bills than he allegedly saved with his tax avoidance scheme. And as for Romney, does anyone doubt that he would gladly pay 10 times the $54,000 he saved on taxes to not have this issue hanging over his political future?

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