Tuesday, August 31, 2010

EDITORIAL >>Keet blames wife, others

Champagnolle’s Fourth Rule of Politics is that you never raise an issue that might expose your own liability. Jim Keet should have learned the wisdom of the rule last week.

Keet, the business candidate who moved to Arkansas last year to run for governor, had been hammering Gov. Beebe and other Democrats over the misuse of state vehicles, a long-running story developed by the reporters over at the Arkansas Democrat-Gazette. Some officeholders — Beebe not among them — were not paying state or federal income taxes on the perk, as the law clearly requires them to do. Although Beebe doesn’t have a state car, he was supposed to be liable because it happened on his watch. (It also happened on the watch of his predecessor, Mike Huckabee, and others before him, but let’s stick to today’s news.)

A couple of reporters for the same paper, which has spoken highly of the Republican candidate, began to look into Keet’s own tax-paying history insofar as they could under taxpayer privacy laws. It turned out that for three years, Keet had taken a homestead property exemption on his real estate taxes and that he wasn’t entitled to it. He skipped payment of personal property taxes on an airplane that he had registered under a shell corporation in Nevada, and we don’t know if he paid sales or use taxes on the craft as the law requires if it is domiciled in Arkansas. Let us assume that he paid them, although his campaign headquarters says he is through talking about the issue. Keet’s Little Rock restaurant business has been delinquent from time to time in remitting sales tax receipts to the city, which restaurants and hotels are supposed to do each month.

Keet owned up to the mistakes, but he blamed his wife, the county tax assessor, his accountant and his employees. He paid the property taxes for 2006, 2007 and 2008 this summer when the campaign heated up and the county tax assessor alerted him that people were prying.

As a “courtesy,” County Assessor Janet Ward tipped off Keet this summer that people were asking about his taxes, and he was able to get squared away on his delinquent taxes before the newspaper reported on them.

We ought to cut Keet some slack on some of his problems. The county tax assessor mistakenly gave him the homestead exemption on his Chenal Valley house in west Little Rock while he was living in Florida and he didn’t correct the assessor’s mistake. He left it to his wife to handle their personal taxes, and Mrs. Keet said she just misread the line allowing them the homestead exemption for the years that it was not their homestead. She thought the line on the tax statement meant the county had won a lawsuit of some kind and was giving property owners like them a tax cut every year.

But the oversight on his airplane taxes is not so explainable. The county stopped assessing the plane for tax purposes in 2007 after Keet told the assessor that he lived and used the plane in Florida, which meant that he would be paying Florida taxes on the property. But he didn’t pay Florida taxes either. Keet explained that he believed that since he had created a Nevada corporation to own the plane and had registered it in that state, he didn’t have to pay property taxes because some Nevada counties didn’t assess airplanes. But Nevada taxes aircraft the same as Arkansas if the plane is actually there.

Keet said he registered the plane in Nevada because it was “easier” than registering it in Arkansas. What is hard about registering in Arkansas?

There is a cottage industry advising airplane buyers where to buy, sell, register and take delivery of airplanes to avoid property, sales and use taxes. Keet apparently did not understand the technicalities very well.

Taxpayers big and small use every legitimate means to lower their taxes, and we would expect a good businessman like Keet to do it, too. But a good businessman, especially one who is running for governor on those skills, makes sure that he strictly complies with the law because that is what the average taxpayer is expected to do.

And he doesn’t pass off the blame to his wife, accountant or employees.