The race for the 24th Congressional District has gotten tight – and some would say ugly too – as incumbent Lois Capps and her competitor Abel Maldonado trade jabs over tax controversies.
In the last week, the Maldonado campaign has taken Capps to task for not reporting income from a room she rented out to a staffer living in her residence. In politics, where timing is everything, the revelation couldn’t have come at a more apropos time.
The Capps campaign has been challenging Maldonado to release his tax returns and has accused him of failing to pay back taxes. Maldonado has been mired in a legal battle with the Internal Revenue Service. The former Lieutenant Governor and his family business, Agro-Jal, are engaged in a dispute over tax deductions with the IRS.
Maldonado’s campaign communications director, Kurt Bardella, told the Journal that the Capps campaign has played fast and loose with the truth and that in fact Maldonado’s dispute with the IRS is about deductions being taken over a 10-year period, instead of a 29-year span.
In light of Maldonado’s tax dispute, the Capps campaign has increasingly made trust the focus of the race and recently released a television advertisement that somberly declares, “Trust: it’s a simple word with a powerful meaning.” On Aug. 4, the Congressional Leadership Fund super PAC released a counter-ad that quoted the line, before pointing out that she rented a room to a staffer but did not report the income to the IRS until this year.
“From 2001 to ’05, Congresswoman Capps rented a room in her house to someone who was getting paid from both her congressional and campaign office, kept it secret from Congress until 2006 and inexplicably kept it hidden from the IRS until 2012,” Bardella told the Journal on Tuesday. “Her efforts to turn attention away from her failure to disclose are desperate and ring hollow. How is it possible that her certified public accountant knew in 2006, what she didn’t know until 2012? Quite frankly, the Central Coast would be better served if, after 42 consecutive months of unemployment above 8%, Congresswoman Capps focused on helping create jobs rather than trying to save her own.”
The Capps’s campaign has maintained that the failure to notify the IRS was an error found just this year when preparing the returns for the website. Capps has reportedly paid the $8,819 she owed to the IRS for the $41,000 in rent.
“Once I realized there was a mistake, I immediately fixed it,” Capps said in a statement. “I would hope my opponent would do the same.”
Capps’s spokesman Jeff Millman said the tax issues are apples and oranges.
“We found the error ourselves, and Lois immediately filed amended returns and paid the $8,819 she owed,” he said. “That is a big difference with Mr. Maldonado, who was caught by the IRS avoiding $4.2 million in back taxes, still hasn’t paid it, and is currently in federal tax court for making improper deductions for his country club membership, home remodeling, private plane, luxury vacation villa, beachfront home, horse collection and personal expenses.”
He also headed off criticism that Capps’s renting a room to a paid staffer was unethical. “The staffer paid the market rate, he had a rental agreement and there’s absolutely no ethics issue involved,” he said.
Millman has accused Maldonado of deflecting the issue away from his own tax troubles by glossing over them in articles the Maldonado campaign has released regarding Capps’s tax issue.
“They (the Maldonado campaign) erased any mention that Mr. Maldonado initially promised to release his taxes, but now refuses to do so,” Millman stated. “Congresswoman Capps has released all of her federal tax returns for every year she has held public office, and challenged Mr. Maldonado to do the same.”
Bardella responded, “It’s reassuring to know that the Capps Campaign or any of their allies won’t be using any snippets from news articles in any mail pieces or campaign ads.”
The issues of trust and transparency have factored prominently in the race for the 24th District.
“How do you not report income you’re getting from a person on both your congressional and campaign payroll who lives in your house? #REALLY,” Maldonado tweeted (via Twitter) on Aug. 3.
Meanwhile, the Capps campaign released Maldonado’s own filings for 2006-08 from the US Federal Tax Court and sent a campaign letter to Maldonado challenging him to release his latest tax returns.
“Abel Maldonado promised to release his tax returns and now refuses to do so, without explanation,” Millman said. “Obviously, Central Coast voters deserve the truth, they deserve better and deserve to know if Maldonado has met his obligations and paid his taxes.”