Few Details on Arnie's Tax Return
Governor reports how much he paid and gave to charity But Little Else.
Sacremento Bee | December 9, 2004
By Margaret Talev
Gov. Arnold Schwarzenegger disclosed Wednesday that he paid nearly $3 million in taxes and gave more than $1 million to charitable causes for the 2003 tax year, but unlike his predecessors, he isn't releasing his annual tax returns or even saying how much he earned.
His partial disclosure drew criticism from consumer advocates, who said it was meaningless without more context.
"He's releasing the numerator but not the denominator," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights.
"If you don't know how much he makes, you don't know what loopholes he's benefitting from, and you don't know what tax policies he adopts that are good for him or bad for him."
Schwarzenegger's net worth has been estimated conservatively at $100 million, and over the years, he invested his bodybuilding and movie earnings in an array of stocks, bonds, privately controlled companies and real estate holdings worldwide.
"This is Schwarzenegger's trademark - only showing half the picture," Court said. "It's showing the trailer and not the movie. It's classic marketing, showing yourself as a taxpayer but not a mogul."
Although Schwarzenegger has pledged repeatedly to expand Californians' ability to scrutinize their elected officials, his communications director, Rob Stutzman, said that philosophy doesn't - and shouldn't - apply to his personal finances.
"There's a balance here between what is a prurient interest versus why this data is thought to be important to disclose, which is to demonstrate that taxes are being paid," Stutzman said.
Additionally, Stutzman said, even the governor doesn't know the full details of his earnings and holdings because his finances were put into a blind trust before he took office to minimize potential conflicts of interest.
For Schwarzenegger's accountants to release his full 2003 tax returns to the public would mean also releasing those details to Schwarzenegger, blurring that barrier, Stutzman said. He said Schwarzenegger had signed over power of attorney so he would not have to sign his own returns.
A less-detailed picture of Schwarzenegger's finances will be made public early next year, when he files mandated statement of economic interest forms with the state. These forms typically list earnings, investments and debts by range only. "As a practical matter, this is as open as you can be" while maintaining a blind trust, Stutzman said.
It has long been practice for presidents, and in California for governors, to release their income tax data.
In the 2002 governor's race, millionaire businessman Bill Simon, the GOP nominee, initially refused but capitulated under pressure from his opponent, Democratic Gov. Gray Davis, whom Schwarzenegger defeated in the recall election the following year.
During that campaign, Schwarzenegger allowed reporters to inspect his 2000 and 2001 returns. Those records showed him making $57.2 million over that two-year period and paying about $20 million in taxes.
"It was very clear to everyone that the governor was never someone who went out of his way to engage in fancy tax schemes or tax shelters or those kinds of things," his financial adviser, Paul Wachter, said Wednesday. "He's always had lots of income, lots of taxes and normal deductions for someone engaged in business. That philosophy has certainly not changed since he's become governor."
According to the figures Schwarzenegger's office released Wednesday, the Republican governor paid $2,048,037 in federal income taxes and $843,590 in state income taxes, and claimed $1,091,324 in charitable contributions, on his 2003 returns. The returns were filed in October, and the information released Wednesday at the request of reporters.
For income earned in 2002, when he was paid a reported $30 million to star in "Terminator 3: Rise of the Machines," his staff said he paid $6,622,505 in federal income taxes and $2,167,361 to the state and claimed $974,407 in charitable contributions.
First lady Maria Shriver files separately.
Steve Maviglio, who served as Davis' press secretary, said Davis released his returns because "he believes strongly that people who serve in public office should be very candid with the people about how much they earn and what portion they pay in taxes."
The dollar ranges on economic interest statements are so broad that they don't give voters that level of scrutiny, Maviglio said.
"As we have more millionaires and billionaires entering politics, this becomes more important to voters. What is there to hide? That's the bottom line," he said.