Gov. Candidate Arianna Huffington Paid Almost No Income Tax

Political gadfly-turned-California gubernatorial candidate Arianna Huffington launched her campaign by complaining about corporate fat cats who don't pay enough taxes - even though she herself paid almost no income tax at all for the last two years.

Tax records released to the Los Angeles Times on Wednesday show that the wealthy socialite paid no California state income taxes for 2001 and 2002 - and ponied-up a paltry $771 in federal income taxes for the same two-year period.

Despite her meager contribution to the federal budget, the Zsa Zsa Gabor sound-alike lives in an 8,000-square-foot home in Brentwood above Sunset Boulevard that is valued at about $7 million, the Times said, adding, "she socializes with many wealthy and prominent people."

In announcing her candidacy last week, Huffington complained that California's whopping $38 billion budget deficit had been caused in part by "corporate fat cats [who] get away with not paying their fair share of taxes."

Huffington's tax returns show that her income in the last two years was offset by losses she reported for Christabella Inc., the corporation she established to manage her writing and lecturing business.

In an interview Wednesday, Huffington told the Times that there was no inconsistency between her complaints about undertaxed corporation executives and her own meager tax payments. Instead she insisted that her tax deductions had been "very conservative" and didn't rely on "loopholes."

Tax experts quoted by the Times, however, painted a different picture.

"The average guy isn't able to wipe out the taxes on his wage income because he doesn't have millions of dollars in losses" from a private corporation, said Phil Holthouse, a partner in a Los Angeles certified public accounting firm.

Huffington's ex-husband, multimillionaire Michael Huffington, told the Times that the gubernatorial candidate benefited from additional income not reflected on her tax return in the form of child support he pays.

While he declined to specify the exact sum, Mr. Huffington said it was "very substantially above" the $183,000 that Christabella Inc. reported as its gross receipts in 2002.

"It's clear to me that much of her tax-free child support is going toward her business," he told the Times. "A lot of businesses would like to have tax-free income."

Read more on this subject in related Hot Topics:
California Governor's Race

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