State Controller Steve Westly released a decade of his tax returns Monday, showing the former EBay executive received nearly a quarter of a billion dollars in income during the 10 years, mostly from selling stock in the online auction house.
Westly’s release of tax returns is designed in part to pressure Gov. Arnold Schwarzenegger and state Treasurer Phil Angelides to do the same. Westly is facing Angelides in the June 2006 Democratic primary for governor, and Schwarzenegger, a Republican, announced last week that he would seek reelection.
“Anyone who runs for governor needs to be open and honest with his or her finances, and we think it’s important to have this out early in the campaign,” said Jude Barry, campaign manager for Westly, who allowed reporters to view -- but not photocopy -- the tax returns.
The Schwarzenegger and Angelides campaigns said their candidates would also release their tax returns before the election. A Schwarzenegger campaign spokesman, Rob Stutzman, dismissed Westly’s move as a political ploy meant to garner publicity.
He cast the controller as “someone no one knows about who is dying for attention.”
Stutzman said the governor would release tax records covering 2003 and ’04 later this year. Last year, Schwarzenegger broke with the practice of previous California governors and withheld his tax return from public view. Asked if the governor would release returns going back to the 1990s, as Westly has done, Stutzman said that would be “unlikely.”
Angelides campaign spokesman Dan Newman said the treasurer is focused on defeating the governor’s initiatives on the Nov. 8 special election. He will turn his full attention to the governor’s race -- still 14 months away -- after that, Newman said.
Westly’s tax returns do not spell out his net worth. But they show an explosion of personal income from stock sales in the late 1990s, starting with $40 million in adjusted gross income in 1999 as his EBay stock options matured. The year before, Westly reported making just shy of $1 million as a new vice president of the EBay online auction house, based in San Jose.
Westly’s income rise was meteoric. In 1995, he reported making $120,109 from three jobs: as an economic development director for the city of San Jose, as a teacher at Stanford University and as an executive of Internet provider Netcom. He reported income of $138,390 in 1996 and $259,887 in 1997, the year he started at EBay.
In total during the last decade, Westly reported $225.8 million in adjusted gross income. He paid $63.5 million in state and federal taxes during that time, the Internal Revenue Service and California tax returns show. That represents about 28% of his adjusted gross income over that period.
In terms of income, Westly appears to have kept pace with Schwarzenegger.
During the 2003 gubernatorial recall campaign, Schwarzenegger made public his tax returns covering 2000 and ’01. He reported $26.1 million in total income in ’01, and $31.1 million the year before.
Over the decade, Westly donated $15.7 million to charity -- about 7% of his total gross income. Most of the money went to the Steve and Anita Westly Foundation, which supports “education, youth, healthcare, immigration and global security” charities, according to campaign officials. His other big charitable investment was in Stanford University, his alma mater.
Westly’s returns showed hundreds of investments in blue-chip companies, mutual funds, dotcom start-ups and technology companies during the early part of the decade.
Westly took a large loss on the 2001 return, the same year many investors lost their shirts in the dotcom crash. Westly’s return shows a loss of $67.5 million from stocks previously worth $82.1 million. After deductions, he reported $13 million in adjusted gross income that year, far less than the $63 million he reported in 2000.
In 2002, he fared much better: a gain of $84.8 million. His adjusted gross income, after deductions, was $73 million -- his best year of the decade. He sold about 1.5 million shares of EBay that year, the tax returns show.
Before being elected state controller, Westly put his assets in a blind trust. In 2003, his first year in office, Westly reported making $28 million; he reported making $5 million last year, most of it income from the blind trust. The assets of the trust are not disclosed.
Schwarzenegger also placed his assets in a blind trust upon taking office in 2003. Though he committed to releasing his returns, the governor may wind up withholding some records involving his financial dealings so as not to compromise the blind trust, aides and advisors said.
“If there is something that has to be withheld [from the tax returns made public] to protect the blind trust, we would let people know there are such items,” said Paul Wachter, the governor’s financial advisor.
Westly is expected to announce the endorsement today of the Assn. of Los Angeles Deputy Sheriffs, a group that endorsed Schwarzenegger during the 2003 recall.
Schwarzenegger has been criticized by police and deputies groups for backing an initiative to curb the use of union dues for political purposes and for a pension proposal, which has since been dropped, that would have cut off death and disability benefits to law enforcement personnel.
Times staff writer Peter Nicholas contributed to this report from Sacramento.