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Tax returns show governor makes most money from investment gains
| Friday, Apr 14 2006 8:15 PM
Last Updated: Friday, Apr 14 2006 8:15 PM
Gov. Arnold Schwarzenegger released three years of tax returns Friday, showing that the actor turned politician is now making more money in investments than he is through his movie company.
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Schwarzenegger reported earning a $4.2 million salary in 2004, largely from film revenue, which was a significant drop from the $18 million he made in 2002 when he starred in Terminator 3.
But in his first full year as governor, Schwarzenegger accumulated most of his income through capital gains, according to copies of tax returns that his investment firm allowed reporters to read but not copy.
Schwarzenegger's tax returns showed he made almost $16.8 million through wages and investments in 2004. The bulk of that income, $9.6 million, came from capital gains payments made from a blind trust that Schwarzenegger set up after he took office in 2003. The trust also yielded much of Schwarzenegger's $1.1 million in dividends and $1.3 million in taxable interest.
"As the movie income comes down, it leads to a lower salary, and capital gains will keep going up," said Paul Wachter, chief executive officer of Main Street Advisors, the governor's investment firm.
Wachter said the boost in Schwarzenegger's capital gains payments could reflect a combination of stock and mutual fund sales and a broader, more diverse portfolio. He declined to go into specifics about the blind trust or say how much the governor is worth. He is estimated to be worth about $100 million.
Schwarzenegger has filed an extension for his 2005 taxes and likely will file his return in October, Wachter said. The regular tax deadline is Monday.
State Controller and Democratic gubernatorial candidate Steve Westly has called upon his opponents to release 10 years of tax records. His primary opponent, State Treasurer Phil Angelides, has released returns dating back to 1998, the year he took office. Schwarzenegger has released four years of returns.
The governor is not accepting his state salary of $175,000 and directed his financial advisers to put his investments into a blind trust so he could avoid any potential conflicts of interest. As a result, neither he nor taxpayers can know how he is making his money.
"If we sold something or bought something, he wasn't part of it," Wachter said.
Until the creation of the trust, Schwarzenegger reported holdings that included dozens of blue chip stocks such as Starbucks, Wal-Mart, IBM and Microsoft. Records show he reported $31.1 million in income in 2000.
His tax returns did offer a glimpse into how Schwarzenegger spends some of his money. In 2004, he gave 1,190 shares of Starbucks to his children's school, Brentwood School in Los Angeles. The shares were worth $55,985 at the time.
He also gave $404,087 in cash to a variety of charities, which his advisers declined to name.
Schwarzenegger paid his household staff $390,472 in 2004. His advisers said they did not know how many staff members were on the payroll.
First Lady Maria Shriver did not release her tax information.