A rocky day for Romney as money questions persist

Published 6:27 pm Thursday, January 19, 2012

CHARLESTON, S.C. — Facing newly barbed questions about his wealth, Mitt Romney on Thursday refused to bow to pressure to immediately release his tax returns in the rocky home stretch of South Carolina’s Republican primary. Though still the nomination front-runner, he also lost his claim to an Iowa victory just as Newt Gingrich emerged as a stronger threat.

“You’ll hear more about that. April,” was all Romney had to say in response to a shouted question about his tax records from the crowd gathered outside his campaign headquarters here.

The event was his only one ahead of an evening debate in which questions about his wealth were all but certain.

He has reluctantly agreed to release his tax returns but has spurned calls from his rivals and even allies — including key supporter New Jersey Gov. Chris Christie — to do so immediately. He says people will have to wait until April, probably after the GOP has settled on a nominee. Romney also has not yet explained why he keeps part of his fortune in the Cayman Islands. His campaign says he does not receive a tax break on the money there.

The silence from Romney’s campaign on details of his holdings was just one element of a political day that underscored the unpredictability of Saturday’s South Carolina primary.

In a blow to Romney, Texas Gov. Rick Perry dropped out of the race and endorsed Gingrich, a move that could start to consolidate conservative support behind the former House speaker.

That shrunk the field, leaving Romney and Gingrich on stage Thursday night with just Texas Rep. Ron Paul and former Pennsylvania Sen. Rick Santorum. Santorum claimed an Iowa win during the day — the state party said he did have the biggest share of the votes it could count — and he continued to fight Gingrich for the mantle of Romney’s chief conservative foe.

Romney barely mentioned Perry at all, leaving him out of a speech to supporters and only mentioning him in passing when pressed by reporters afterward.

“Terrific guy, terrific conservative,” Romney said. “We’re going to miss him on stage tonight.”

One bright spot on an otherwise dreary day came when a key South Carolina donor and former Perry supporter, David Wilkins, said he would support Romney instead of backing Gingrich.

But Romney also was grappling with the announcement from the Iowa GOP that Santorum actually led him by 34 votes in the final tally of the state’s leadoff caucuses, though no winner has been declared. At the very least, it was a symbolic setback for a Romney campaign reeling from a series of bumps over the past few days.

In a written statement, Romney called the Iowa results a “virtual tie” and praised Santorum’s “strong performance” in the state.

It was a far different type of day when Romney touched down in South Carolina just over a week ago, coming off what appeared to be twin victories in Iowa and New Hampshire.

Since then, Romney has been confronted by attacks from his opponents on everything from his tax returns to his changed positions on social issues like abortion. And he’s made unforced errors talking about his own personal wealth and defending the private equity firm he founded, Bain Capital.

On Tuesday, Romney disclosed that he pays an effective tax rate of about 15 percent, lower than what he would pay if he earned a regular paycheck rather making most of his income in dividends, capital gains and the like. He also called “not very much” the amount he earned in speechmaking fees: $373,327.62 for 12 months in 2010 and early 2011.

His campaign has repeatedly refused to answer more questions about his fortune, and the candidate himself has tried to change the subject as Gingrich inches up in polls.

Recognizing the threat, Romney has assailed Gingrich’s claims that he helped President Ronald Reagan create jobs. He says Gingrich is living in “fantasyland.”

Regardless of the outcome of the primary Saturday, the former Massachusetts governor’s past 10 days have played into the hands of Democrats who are looking to paint him as an out-of-touch multimillionaire during the general election.

In the meantime, Democrats planned a series of news conferences to argue that the work Romney did at Bain Capital wasn’t the same as bolstering American manufacturing.

President Barack Obama’s campaign advisers contend voters are unlikely to back a wealthy Republican with financial-industry ties at a time of lingering economic distress.

The questions about Romney’s wealth began last week in New Hampshire when he told an audience he knew what it was like to worry about being “pink-slipped” and losing a job. A day later, he said, “I like being able to fire people who provide services to me” — a comment about health insurance companies that his rivals used to paint Romney as out of touch with ordinary Americans.

In a moment that was clearly unscripted, Romney disclosed for the first time Tuesday that, despite his wealth of hundreds of millions of dollars, he has been paying taxes in the neighborhood of 15 percent, far below the top maximum income tax rate of 35 percent, because his income “comes overwhelmingly from investments made in the past.”

During 2010 and the first nine months of 2011, the Romney family had at least $9.6 million in income, according to a financial disclosure form submitted in August.

The maximum marginal U.S. income tax rate of 35 percent applies — in theory more than practice — to households with taxable income of over about $388,500.

Like many wealthy people, the Romneys have been helped by changes in federal tax policy that have placed much lower tax rates on investment income — from dividends, interest and capital gains from the sale of stocks and other assets — than on wages and salaries.

Under the Bush-era tax cuts strongly supported by most Republicans, such investment income, including gains on securities held for a year or longer, is subject to a tax rate of 15 percent.