Simon Campaigns in L.A.

Republican gubernatorial candidate Bill Simon Jr. toured some of Los Angeles’ neediest neighborhoods Wednesday with former Housing and Urban Development Secretary Jack Kemp, promising to spur investment in the inner city through tax credits.

But Simon’s message was interrupted by persistent questions about his finances, as protesters organized by the Democratic Party shadowed him throughout the afternoon, waving signs that said “Tax Evader” and chanting “What is Simon hiding?”

The multimillionaire businessman, who has refused to release his tax returns, has come under increasing scrutiny in recent days since the Internal Revenue Service listed him as the beneficiary of a possibly illegal tax shelter set up by KPMG, one of the world’s biggest accounting firms.

Simon, who has not been accused of any wrongdoing by the IRS, has repeatedly said that he has complied with California’s disclosure rules and insisted that tax returns are a private matter between an individual and the government.

But the issue continues to dog him on the campaign trail. On Wednesday, as he boarded a bus in downtown Los Angeles to take a tour of several affordable housing projects--walking in the shadow of the KPMG office building--he had to squeeze by a dozen protesters, including one dressed as a 1040 tax form.

“Disclosure!” they shouted. “We want disclosure!”

“I have disclosed,” Simon said, smiling as he clambered onto the bus.

Simon said he will not change his mind about releasing his returns, adding that Californians are not interested in his financial arrangements.

“I’ll tell you what they want to talk about,” he said. “It’s not tax returns; it’s jobs. It’s not tax returns; it’s schools, it’s the quality of life. It’s their roads, their water and their power.

“If [Gov.] Gray Davis wants to switch the subject because his track record is very poor in those areas, I guess I don’t blame him,” he added.

Aides to Davis said people have a right to know how Simon has spent and invested the money he has made.

“When you run for office, you’re asking people to trust you,” Davis spokesman Gabriel Sanchez said. “In return, you have to trust them to make an informed decision about you based on your record, whether it be as a businessman or elected official.”

Simon spent the afternoon visiting projects in Pico Union and East Los Angeles on a tour organized by the Greenlining Institute, a San Francisco-based advocacy group for economic development in poor communities.

At La Villa Mariposa in Pico Union, a 115-unit complex for single women and their children, Simon and his wife, Cindy, tiptoed around children napping on cots in the spacious day-care center.

“Isn’t this great?” he said, gently patting some of the sleeping children. One boy woke up with a start and stared at him in confusion.

The $15-million nonprofit project, built on land purchased by the Community Redevelopment Agency, was financed by the Bank of America and other investors.

“This is a progressive idea,” Kemp said. “This can be done in other communities.”

Simon said government needs to provide more incentives through tax credits for businesses to invest in similar projects.

During a news conference with Kemp, the candidate repeated his call to cut the capital gains tax to 5% and said he would designate urban empowerment zones in needy areas where the capital gains tax would be eliminated entirely.

“The state must focus on and foster public and private partnerships within local communities, and eliminate high taxes and crushing regulations which have caused good jobs and businesses to leave our state in droves,” he said.

John Gamboa, executive director of the Greenlining Institute, said he would like to see the state government play a broader role in promoting investment in low-income areas by requiring insurance companies and investment houses to make the same kind of community development loans that banks currently do.

“The missing link has been the government,” Gamboa said.

But Simon said he favors a different approach.

“What we need to do is have people voluntarily come in here with their capital,” he said.

As he left for the next stop on the tour, Simon was greeted by the same gaggle of protesters.

“Disclosure, disclosure, what’s it all about?” they chanted.

“Oh boy,” the candidate said under his breath, smiling firmly as he walked past them.