Gov.'s Income Strong, Records Reveal
Gov. Arnold Schwarzenegger is taking no state salary but has pulled in millions of dollars from investments and private income in his first full year as California governor.
Schwarzenegger’s campaign on Friday released tax returns for 2002-04, showing that his income stayed strong after he made the jump from entertainer to politician. He has not yet filed his 2005 tax return.
Listing his occupation as “Governor-Actor,” Schwarzenegger’s returns show that he earned $16.8 million in 2004, and paid $4.3 million in federal and state taxes.
Schwarzenegger’s 2004 income was 21% higher than the previous year, when he began his successful campaign for governor. The money came from movie royalties, interest and dividends from varied investments, and a contract with a fitness magazine publisher that he ultimately severed, according to the returns and interviews.
Schwarzenegger’s tax records covered more than 260 pages. Tucked inside were rare glimpses of Schwarzenegger’s wealth and lifestyle.
He reported paying household help more than $390,000 in 2004 and more than $430,000 in each of the two years before that. Schwarzenegger lives in a Brentwood mansion.
Lawmakers who have met with him at his home say they have been served drinks and appetizers by uniformed staff.
Schwarzenegger also reported giving hundreds of shares of Starbucks stock to his children’s schools in Brentwood as a charitable contribution.
In 2002, he reported receiving two large all-terrain vehicles, Hummers, together valued at nearly $152,000. As governor, Schwarzenegger has touted hybrid vehicles with greater fuel efficiency.
Although Schwarzenegger makes an enviable living, his financial advisor, Paul Wachter, said he has forsaken millions of dollars by leaving Hollywood for Sacramento.
“He could be making movies at $25 [million], $30 million a pop,” Wachter said. “Anyway you cut it, he gave up that income.”
A year after taking office, Schwarzenegger’s aides said he would not release his tax returns. His office revealed only the sums he had paid in taxes in 2003 and his charitable contributions that year.
Aides withheld Schwarzenegger’s income, dismissing it at the time as “an issue of curiosity” that the public did not need to know.
With the major Democratic candidates for governor releasing their tax returns, Schwarzenegger was coming under growing pressure to do the same.
He made his returns available to reporters on Friday morning in a hotel near the Capitol, but did not let them take copies.
In the three-year period covered, Schwarzenegger reported paying $15.7 million in California and federal income taxes -- or 28.6% of his income.
He also paid taxes in several other states, including Ohio, where he owns a shopping mall, and New York, where he received some movie income.
Schwarzenegger’s most lucrative year was 2002, when he earned a total of $24.1 million -- largely through payments from the movie “Terminator 3,” Wachter said.
Wachter said that Schwarzenegger has had his taxes audited in years past and expected that they would be audited again.
“He’s been a public figure for 20 years,” Wachter said. “We’re audited; it happens.”
Schwarzenegger reported paying $1.56 million in mortgage interest in 2004, and giving $460,000 to charity.
He reported charitable contributions of $1.09 million in 2003, and $974,000 in 2002.
The public assets that Schwarzenegger holds include several high-end investment funds aimed at wealthy and sophisticated investors.
They carry minimum investments of $500,000, $1 million and even $5 million.
And a company that he owns purchased a 747 jumbo jet in the mid-1990s that is leased to Singapore Airlines.
The two Democratic candidates for governor have made a fuller financial disclosure than Schwarzenegger.
State Treasurer Phil Angelides made public returns dating to 1998, the year he was elected.
Steve Westly, elected state controller in 2002, released tax records going back 10 years, and has called on the other candidates to do the same.
“Be upfront and come clean about it,” Westly spokesman Nick Velasquez said. “This is not good enough. It doesn’t cut it.”
Angelides, who made his money in Sacramento real estate, is the least wealthy of the three main candidates. He reported income of $11.6 million over the seven-year period -- an average of $1.66 million a year.
Angelides also reported paying a slightly greater share of his income in state and federal taxes than the other two -- about 29%.
Westly, who made his wealth at the online auction house EBay, reported income of $225.8 million over the 10-year period covered by his release -- an average of $22.58 million a year. He paid about 28% in taxes.
Upon winning election, Schwarzenegger sold off stock and many other investments, placing the proceeds in a blind trust managed by Wachter. The trust is meant to shield Schwarzenegger from conflicts of interest that might arise if he took action that could affect one of his investments. Because of the way such trusts are designed, some of the assets he holds may never become publicly known.