California Gov. Gavin Newsom and his wife reported more than $1.2 million in income during his final year as the state’s lieutenant governor, the majority of it from outside business interests.
Newsom made good on a campaign promise by allowing reporters to review his 2018 income tax filing on Friday. He also plans to release returns every year he’s governor. Newsom has not yet filed his 2019 taxes.
Last year Newsom, a Democrat, signed a first-in-the-nation law that would have required President Donald Trump to release his returns if he was to appear on the state primary ballot. The California Supreme Court ultimately rejected it as unconstitutional.
Newsom’s 2018 return showed nearly $394,000 in wages, of which about $151,000 was his state salary. His wife, Jennifer Siebel Newsom, is a filmmaker and actress with her own outside income, though the couple filed jointly.
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Their $1.2 million in total income was reduced to about $973,000 in taxable income through various business and other deductions, including $25,683 in unspecified charitable contributions and declaring his four young children as dependents.
The family’s tax filing seems “pretty straightforward,” said Arthur “Kip” Dellinger, a certified public accountant and senior tax partner with Cooper, Moss, Resnick, Klein & Co.
Newsom donated about 2% to charity, which Dellinger said isn’t "demonstrably low" given his significant expenses including the four children. Newsom paid more than $87,500 in household employment taxes, which his office said was for four staff who provided child care and other help around their home.
He reported additional net income of more than $775,000 under a listing for rental real estate, royalties, partnerships, trusts and other business interests.
Newsom founded The PlumpJack Group in 1992, which owns a hotel, four Napa Valley wineries, and bars, restaurants, and wine and liquor stores.
Airelle Wines Inc., which includes his Napa wineries, provided a net income of about $580,000. Falstaff Management Group Inc. provided more than $84,000.
The couple reported smaller amounts of other outside income including from a blind trust owned by Siebel Newsom.
Newsom reported more than $57,000 in dividends and interest, but only $2,600 of that was tax-exempt interest.
"That (interest and dividend income) is not a lot of money, it’s not money that we would compare to wealthy people, really wealthy people. He’s probably not invested in a bunch of hedge funds, which sometimes get politicians in trouble," Dellinger said. "Certainly with those kind of numbers there are no tax shelters that are involved in this."
Newsom promised, after he was elected governor, that he would give up control and bar state agencies from doing business with his firms to avoid conflicts of interest.
Ethics experts said selling the assets and putting the proceeds into a blind trust would be one way to avoid conflicts. Newsom transferred them to a blind trust, but said he couldn’t bear to sell businesses he’s cultivated for decades.
Former Gov. Arnold Schwarzenegger also put his assets in a blind trust. Both governors’ trusts were managed by family friends. Their decisions contrast with Trump, who has faced criticism and lawsuits for refusing to divest from his business holdings.
Newsom released six years of tax returns during his gubernatorial campaign, after two straight cycles in which neither major party nominee released theirs. His office said he is the first California governor who will release his tax returns every year in office.
As he did during the campaign, Newsom allowed reporters 45 minutes to review his inch-thick tax return but not make photocopies. Aides couldn’t say when he will make available this year’s tax filing.
It showed he owed federal taxes of nearly $360,000 and more than $121,000 in state taxes.
The Newsoms’ income places them solidly in the upper class. Census figures show the median household income in California was about $72,000 in 2017.
Newsom is far from the richest governor. He’s eclipsed by a number of others, including two billionaires: Hyatt hotels heir J.B. Pritzker in Illinois and businessman Jim Justice of West Virginia.