Tax questions dogging Simon

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Tax questions dogging Simon
He says he'll release his future returns -- if he's elected governor.
By Dan Smith -- Bee Deputy Capitol Bureau Chief
Published 2:15 a.m. PDT Wednesday, July 17, 2002
Republican gubernatorial candidate Bill Simon declined Tuesday to provide details about investments now under investigation by the federal government and once again refused to release his income tax returns.

Pressed for details at a stormy appearance before the Sacramento Press Club, Simon did little to quell the mounting questions about the sources of his substantial wealth and his efforts to avoid tax liability through offshore investments.

At one point, Simon suggested data about the questioned investments could be found on his state-required candidate disclosure form, then later acknowledged that the information was not there. He declined to provide the information verbally.

He said he would release future tax returns if voters elect him governor in the Nov. 5 election but would never disclose the returns now under scrutiny by the Internal Revenue Service.

"At that point, when I'm their governor and I'm working for them, they have a right to know," Simon said. "I put it up to the people. Because once again I do believe ... that ultimately the voters want to know, has Gray Davis been a successful governor? What are Bill Simon's ideas? That's really what they want to know about."

Davis, the Democratic incumbent, has hammered on Simon's refusal to release tax returns for months. The criticism soared last week when the IRS filed lawsuits against two accounting firms alleging that they set up overly aggressive foreign tax shelters for dozens of wealthy investors, including Simon, who then were able to claim lucrative artificial tax losses. In an effort to gain more information from the accounting firms, the IRS released the names of some of the investors, including Simon and his late father, former U.S. Treasury Secretary William E. Simon Sr.

Before running for governor, Simon was a partner in William E. Simon & Sons, a New York investment firm he started with his brother, Peter, and their father.

Simon said the tax shelters were vetted with the accounting firm KPMG LLP -- one of the companies the IRS sued -- and internal accountants at his family's investment firm. But he acknowledged that he is ultimately responsible for the tax returns he signed. "When you sign a tax return, that says something," Simon said.

Simon's continued failure to disclose financial information brought more attacks from Democrats. A few dozen sign-toting protesters greeted him at the Clarion Hotel.

Inside, Davis political adviser Garry South said voters deserve to know more about Simon's financial dealings.

"Unless or until Bill Simon is willing to come clean with the voters of this state -- most of whom know very little about the man -- and tell us what his personal financial situation is, with respect particularly to the payment of taxes and the use of these offshore tax shelters, this is going to continue to be an issue," South said. "Now he can can keep his fingers crossed and hope against hope that people are just going to want to talk about jobs ... about water ... about roads, then he's dreaming."

Simon lashed out at Davis on a number of fronts, blaming him for the recent increase in the crime rate, for refusing to return campaign money from Enron, for allowing jobs to escape to Arizona and Nevada, and for failing to deliver a tough accountability system to schools.

To reduce future budget shortfalls, he promised to order a "comprehensive, independent audit of all state spending" upon taking office to permanently trim "wasteful spending and bureaucracy."

He said Davis' campaign fund raising -- which has averaged $91,000 a day since February -- has resulted in California's "first coin-operated governor."
 


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