Bloomberg News

Romney Tax Filings in Spotlight in Florida Republican Campaign

January 27, 2012

(For more 2012 campaign news, see ELECT.)

Jan. 25 (Bloomberg) -- While Mitt Romney used campaign appearances in Florida’s Republican presidential race yesterday to try to turn the attention back to President Barack Obama, his opponents sought to keep the focus on tax returns showing he made $21.6 million in 2010.

“That’s a lot of money,” former Pennsylvania Senator Rick Santorum, one of Romney’s rivals in the Jan. 31 primary, told the Palm Beach Post in an interview. “He paid it in capital gains,” Santorum also said, referring to the 13.9 percent tax rate on Romney’s income.

Democrats, too, combed through Romney’s 203-page 2010 tax return, released yesterday morning, as well as his estimated earnings for 2011 of $20.9 million in adjusted gross income.

In a conference call with reporters, Ben Ginsberg, Romney’s campaign attorney, said: “It’s interesting to note that there are 26 people from the Chicago area listening in.” Obama’s re- election campaign is headquartered in Chicago.

Romney’s wealth has become a central theme of the Republican nominating contest. Aides to his campaign hoped the release of the returns would to dampen the attacks and let the former Massachusetts governor concentrate on economic issues, a topic they see as playing to his strengths.

Capital Gains

The former private-equity executive and Massachusetts governor earned more than half his income from capital gains and dividends, which are taxed at a top rate of 15 percent, rather than the 35 percent top rate for ordinary income, the filings showed. He donated $7 million to charity in the last two years, including $4.1 million to the Mormon church.

Romney campaign advisers said the release should answer questions about his investment and tax payments, saying the candidate and his wife had “fully satisfied” their obligations as taxpayers.

“Governor Romney has paid 100 percent of what he owes,” said Ginsberg.

Still, Democrats argued that two years of records were insufficient to fully evaluate Romney’s finances, pointing to the 23 years of returns he turned over to Arizona Senator John McCain’s presidential campaign in 2008, when he was being considered for the ticket’s vice presidential spot.

“Romney thought McCain’s campaign was entitled to 23 years’ worth of tax returns,” Democratic National Committee Executive Director Patrick Gaspard said in a statement. “He’s made clear that Americans are only entitled to one years’ worth of returns.”

‘Prebuttal’

Romney at a stop in Tampa yesterday blasted Obama for failing to restart the struggling U.S. economy as he delivered what his campaign called a “prebuttal” to the president’s State of the Union speech to Congress last night.

Later, in a remark that recalled Romney’s support for corporations in August, he said, “The banks aren’t bad people. They’re just overwhelmed right now.”

Romney, speaking in front of a home in foreclosure in Lehigh Acres, Florida, went on to say that “banks are scared to death to write down loans for fear that it will make them go insolvent.”

During an Aug. 11 visit to Iowa, Romney responded to chants of “Wall Street greed” among his audience by saying, “Corporations are people, my friend. Everything corporations earn ultimately goes to people.”

Freddie Mac

Romney also used his Lehigh Acres stop to spotlight the $1.6 million over eight years that government-backed mortgage- lending company Freddie Mac paid to a consulting firm owned by Newt Gingrich, his prime rival in the Republican race.

“Housing has become a mess, in large measure because government got in the middle of it,” Romney said. “I’m running against a guy, as you know in this primary, who was working for one of these guys, for Freddie Mac.”

Romney suggested Gingrich used his influence to profit from pushing a policy direction that was ultimately bad for the nation.

“He was standing up as the former speaker of the House and someone who many people respected as a conservative leader,” Romney said. “He was standing up and defending Freddie Mac and Fannie Mae,” the government-backed mortgage-finance companies.

‘Outrageously Dishonest’

Gingrich said those charges were “outrageously dishonest,” given that Romney’s financial-disclosure report showed investments in both Freddie Mac and its sister company, Fannie Mae.

“I don’t own any Fannie Mae and Freddie Mac stock,” Gingrich said. “He does, so presumably he was getting richer.”

An upbeat Gingrich was met by enthusiastic crowds as he campaigned across Florida’s western coast. He barely mentioned his Republican opponent at his three events yesterday. Instead, he also turned his fire on Obama.

The president has gone from “yes we can to why we couldn’t,” he told thousands gathered in an airplane hangar in Sarasota.

While Gingrich rallied the crowds, his aides worked to raise the money necessary to run statewide.

R.C. Hammond, Gingrich’s spokesman, said the campaign has raised $2 million since its 12-point win over Romney in South Carolina’s Jan. 21 primary.

Winning Our Future, a political action committee supporting Gingrich while operating independently of his campaign, bought $6 million of advertising time in the state yesterday and released an ad painting Romney as aligned with Obama, said Rick Tyler, a strategist for the group.

Knowing Mitt

“Think you know Mitt? Think again,” the ad says. “When Mitt Romney invented government-run health care, Romney advisers helped Barack Obama write the disastrous Obamacare.”

The $6 million committed to airtime is enough for Gingrich backers to blanket Florida with ads. It costs about $1 million a week to compete in the 11 media markets in Florida, the fourth most populous state.

Gingrich faced questions about his own finances during a Jan. 23 debate in Tampa as he fended off attacks from Romney on the consulting work he did for Freddie Mac and his advocacy for a Medicare prescription drug benefit for seniors that added to the federal deficit.

Calling Gingrich an “influence peddler,” Romney told him: “You are being paid by companies at the same time you’re encouraging people to pass legislation which is in their favor.”

‘Difficult Time’

Still, the tax issue dominated the campaign talk yesterday. Romney “will have a very difficult time getting any other message out except for debating his taxes,” said Eddie Mahe, a Republican consultant who hasn’t endorsed a candidate. “It is unbelievable they could allow themselves to get into that situation. That’s not what you want to be talking about.”

Gingrich and other Republicans pushed for details about Romney’s tax obligations for weeks, criticizing him for his wealth and tenure as head of private-equity firm Bain Capital LLC. Initially, Romney resisted releasing his returns, arguing that the financial-disclosure documents all federal candidates must file gave a sufficient picture of his personal finances.

After his loss in South Carolina, Romney relented.

“We just made a mistake in holding off as long as we did,” he said in a Jan. 22 interview on Fox.

Delaying the release was “a terrible blunder,” said Seth McKee, a political science professor at the University of South Florida in St. Petersburg. “Once you get into that situation, you created the problem yourself.”

At least some voters didn’t seem quite as concerned. Falguni Patel, 53, a wine store owner from Lutz, Florida, who attended Romney’s event yesterday in Tampa, said she thinks it’s good that he released his tax records and has no concerns that his wealth would be used against him in a general election.

“We need more millionaires in America,” she said. “He can come back and say that he built himself into what he is today.”

--With assistance from Jonathan Salant in St. Petersburg, Florida. Editors: Jim Rubin, Don Frederick

To contact the reporter on this story: Lisa Lerer in Tampa, Florida at llerer@bloomberg.net; John McCormick in Tampa at jmccormick16@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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