Caruso says he paid $1.6 million in income tax over five years, but won’t release returns

Rick Caruso has released information on the taxes that he and his businesses paid over the last five years but — unlike most other major candidates in the race for Los Angeles mayor — the billionaire businessman’s finances and tax rate remain mostly secret because of his unwillingness to release his full returns.

A letter from Caruso’s campaign reviewed by The Times says that the real estate developer paid more than $1.6 million in personal income taxes to the state and federal government over five years, or about $328,000 a year, on an undisclosed amount of income.

Caruso declared that he and his wife, Tina, made $39.6 million in charitable contributions. The report does not specify which organizations received the money, though in the past Caruso’s family foundation has reported large donations to programs supporting disadvantaged children, low-income scholars and medical research at USC, where he served on the board of trustees.

The developer of the Grove, Americana at Brand and other shopping centers declined to release information about his income, so it remains unclear what share of his money goes to the state and federal government.

California

Rivals take aim at Caruso (and his yacht) in his first mayoral debate

Rick Caruso joined rivals Karen Bass, Joe Buscaino, Kevin de Leon and Mike Feuer onstage for the first time in Tuesday’s Los Angeles mayoral debate.

March 22, 2022

He also said in the two-page tax report that he paid more than $2.3 million in business income taxes and stated that he paid taxes on his 216-foot yacht, Invictus. But the amount levied on the $100-million vessel, now for sale, also remains private.

The declarations from Caruso come a little more than three weeks after one of his rivals for mayor, City Atty. Mike Feuer, challenged the businessman during a debate at USC to match Feuer by releasing five years of his tax returns. Debate moderator Elex Michaelson of Fox 11 News then challenged all five of the top candidates in the race to do the same.

Feuer was first to provide his tax forms, followed by U.S. Rep. Karen Bass (D-Los Angeles) and City Councilman Joe Buscaino. City Councilman Kevin de León initially balked at providing his tax information, but on Friday released part of his returns for two years and provided details on his 2021 return.

De León said through a spokesman that a recent move prevented him from providing five years of returns, but that he planned to release most of the information by Tuesday.

The complete returns of the other three elected officials were unremarkable — showing that each declared relatively modest income outside of their salaries, which were already public information.

Feuer’s declared the highest income, up to $416,000, given the wages of his wife, state Court of Appeal Justice Gail Ruderman Feuer. The couple paid an average of $113,000 a year in state and federal taxes over the five years from 2017 to 2021, between 27% and 30% of their annual income.

Buscaino and his wife, Geralyn, who works for the Los Angeles Unified School District, paid between 17% and 23% of their income in taxes. Filing alone, Bass paid 22% to 23% to the government. De León’s returns showed he paid 26% in 2017 and 23% in 2018; figures released by his campaign indicated 30% of his $194,000 income went to income taxes in 2021.

In the weeks that he waited for Caruso to release tax information, Feuer criticized the businessman for “an aversion to transparency,” comparing the first-time candidate to Donald Trump, who also refused to release his tax returns, both before and after his 2016 election as president.

After Caruso produced the letter about his taxes, Feuer campaign strategist John Shallman released a statement saying: “Rick Caruso thinks voters can be conned. Compared to more than 100 pages of tax returns Mike Feuer released, Caruso puts out a sticky note that says ‘screw you’ to every voter in Los Angeles. Until he releases his full returns, voters will assume that Cayman Islands Caruso is a tax dodger who spends millions more on TV ads than he does on his taxes.”

Caruso’s yacht is registered in the Cayman Islands, a well-known tax haven.

“Rick Caruso has proudly paid hundreds of millions of dollars in taxes and created businesses that have employed thousands of people,” Caruso spokesman Peter Ragone said in a statement.

In a slap about an investigation that has bedeviled the city attorney’s office, Ragone added, “The irony of politicians who practice transparency only when compelled by the FBI or investigations isn’t lost on anyone in L.A. It’s these kind of political games that contribute to out of control homelessness, rising crime and rampant corruption.”

Caruso, whose net worth was estimated by Forbes at $4.3 billion, has flooded the internet and TV airwaves with ads in his campaign for mayor, far outspending his opponents. A poll this week showed him pulling into a dead heat with Bass, who had been the early front-runner in the race. Feuer trailed well behind.

In his brief report and an accompanying letter from an accountant, vouching for the “mathematical accuracy” of Caruso’s summary, the candidate laid out a more expansive view of the payments he and his businesses have made.

His businesses have paid $84.3 million in property taxes, on top of $5 million in “property and other taxes on personal assets,” the report says. The report said some of that $5 million was tied to his ownership of the yacht, without saying how much.

Also listed in the report is a figure of more than $5.4 million, paid by Caruso Cos. in miscellaneous charges, including the city’s business and parking taxes, the California Use Tax and federal excise taxes.

The report contends that businesses and tenants located at Caruso’s various retail centers have paid more than half a billion dollars in hotel, sales and food and beverage taxes. Those taxes are paid largely by consumers and passed on to the government by the businesses. Reporting those taxes appeared to be Caruso’s attempt to show how his work has bolstered the Southern California economy.

Two professors at LMU Loyola Law School in Los Angeles said it was impossible to give a thorough assessment of Caruso’s taxes without more information about his tax returns and businesses. “The documents I see are only a piece of the tax picture,” said Katherine Pratt, who specializes in taxes at the law school.

Feuer insisted that voters deserved to know more details about what Caruso paid, particularly related to his ownership of the yacht. But Caruso’s campaign said it had no intention of releasing any more information on the subject.