Romney says he 'probably' paid only a 15 percent tax rate; Gingrich demands full story
FLORENCE, S.C. _ Mitt Romney tried Tuesday to defuse a growing controversy dogging his front-runner campaign for the 2012 Republican presidential nomination by saying that he "probably" pays a tax rate of 15 percent, far lower than the 35 percent top rate one might assume that a multimillionaire pays.
Romney, whose wealth is estimated at around $250 million, has come under fire for not making his tax returns public, as presidential candidates traditionally do. He said he pays an effective rate "probably closer to the 15 percent rate than anything," and that he would release his tax returns in April.
In the last decade, he said, his income has come largely from investments rather than earned income. Since Bush-era tax cuts went into effect, dividends and capital gains are subject to a 15 percent tax rate; the top rate on ordinary income is 35 percent.
Newt Gingrich, who has emerged of late as Romney's top agitator, still wanted to see Romney's full tax return now.
"Either there's nothing there, so why isn't he releasing them, or there's something there, so why is he hiding them?" Gingrich told reporters. "What is he saying to the people of South Carolina? You're not important enough for me to release my taxes? Nor are the people of Florida?" South Carolina Republicans vote Saturday, Floridians on Jan. 31.
Gingrich warned that if Romney's tax returns contain some problem, President Barack Obama's campaign would exploit it in the fall. "You do not want a nominee who blows up in September, because in September you have no choice," Gingrich said.
Roberton Williams, a senior fellow at the Tax Policy Center, jointly run by the Urban Institute and the Brookings Institution, two respected Washington think tanks, said that Romney's disclosure of a 15 percent tax rate was unclear, perhaps deliberately.
"From his perspective, what advantage is there for letting people know your personal finances, particularly if you are making a lot of money and paying relatively low taxes?" Williams said. Romney did not release his tax returns when he unsuccessfully sought the Republican presidential nomination in 2008.
Williams said it's likely that Romney actually paid lower than 15 percent because of tax deductions. As a practicing Mormon and former bishop of the Church of Latter Day Saints, he is obligated to donate up to 10 percent of his earnings, a practice known as tithing. And because he owns homes in numerous states, he is likely to take tax deductions for property taxes and state taxes.
That means he could be taking deductions on 15 percent to 20 percent of his income; the rest of his income from investments is likely taxed at the 15 percent capital gains rate, but that's a 15 percent rate on 80 percent of his income.
"Even if it just 10 percent (deducted), he's still paying 15 percent on 90 percent of his income," said Williams. "We really don't know what he meant. The statement was very imprecise."
Gingrich, energized by a feisty Monday night debate performance, urged South Carolina conservatives to rally behind him as the candidate who could best take on Obama. When a supporter suggested that Gingrich could "bloody Obama's nose," Gingrich replied: "I don't want to bloody his nose, I want to knock him out."
Both candidates, along with Texas Gov. Rick Perry, campaigned at separate events Tuesday in Florence. With four days to go before the South's first Republican presidential primary of 2012, interviews with voters suggested that many people are still trying to decide.
"Gingrich cleaned their clocks at the debate," said Kathy Dore, a Florence retiree. But she was still undecided. "I like to see candidates up close and personal," she said.
"I do think Gingrich will blow out Obama in debates," said Johnny Valentine, a Florence retiree, but he also likes other candidates. "I may just write their names down Saturday and pull one out."
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