TAMPA, Fla. – The two leading Republican presidential contenders tried to turn the arguments over their business dealings to their own advantage, as Mitt Romney released tax documents that put him among the very richest Americans and Newt Gingrich defended his high-paid consulting work for a mortgage giant that contributed to the housing crisis.
The country’s struggling economy remains voters’ top concern as Republicans choose a candidate to run against President Barack Obama, who delivered his State of the Union policy address Tuesday night to a joint session of Congress.
In his speech, Obama delivered a populist challenge to shrink the gap between rich and poor, saying that ensuring a fair shot for all Americans is “the defining issue of our time.”
He called for a new minimum tax rate of at least 30 per cent on anyone making over $1 million. Many millionaires — including Romney — pay a rate less than that because they get most of their income from investments, which are taxed at a lower rate.
“Now you can call this class warfare all you want,” Obama said, responding to a frequent criticism from the Republican presidential field. “But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.”
The president’s timing could not have been better for a message about income inequality. Romney’s tax returns revealed that he earned nearly $22 million in 2010 and paid an effective tax rate of about 14 per cent. That is a lesser rate than many Americans pay because of how investment income is taxed in the United States.
Romney’s income put him in the top 0.006 per cent of Americans, according to Internal Revenue Service data from 2009, the most recent year available. His net worth has been estimated as high as $250 million.
It remains unclear how the details of Romney’s wealth will play among American workers, who on average earn less in a lifetime than Romney paid in taxes in 2010 alone.
As Romney, the former Massachusetts governor, relented to political pressure and released more than 500 pages of details from his federal tax returns — including a now-closed Swiss bank account — Gingrich kept up the heat, saying Romney was “outrageously dishonest” for accusing him of influence peddling while doing consulting work for government-backed mortgage giant Freddie Mac.
“I don’t own any Fannie Mae and Freddie Mac stock. He does, so presumably he was getting richer,” the former House speaker told Fox News on Tuesday.
Freddie Mac and its larger sister institution Fannie Mae, have become targets for criticism — especially from Republicans — stemming from the housing crisis that helped drive the United States deep into recession and then hampered recovery. Romney’s tax filings show he was an investor in Freddie Mac and Fannie Mae.
Gingrich, who has come under fire for earning more than $1.6 million working as a consultant to Freddie Mac, insisted his high-paid work for the mortgage giant did not include lobbying.
The two candidates squared off a week before the Florida primary on Jan. 31. The state’s diversity, large population and large media markets are a bigger challenge than the three smaller states that have voted in the nominating process so far. Surveys of Florida Republicans show Gingrich leading Romney after his decisive win in the South Carolina primary over the weekend, making Florida pivotal if Romney is to reassert his former role as the inevitable Republican nominee.
The spectre of well-off Gingrich and wealthier Romney feuding over money matters pleased former Pennsylvania Sen. Rick Santorum, who lags in polls ahead of Florida’s primary but hopes to benefit from the dust-up between the front-runners as the race moves on. He told MSNBC: “The other two candidates have some severe flaws.”
On Tuesday, Romney stood outside a Fannie Mae-foreclosed home in a struggling neighbourhood in Lehigh Acres, Florida, to assail Gingrich over his ties to the government-backed mortgage companies that helped make the housing crisis worse, particularly in states like Florida which has one of the highest foreclosure rates in the U.S.
Romney argued that regulations passed during the Obama administration give banks less flexibility if they’re trying to help consumers renegotiate the terms of their mortgages. Romney himself hasn’t outlined any specific proposals to help fix the housing market. He says improving the economy will allow Americans to regain their footing and keep their homes.
Gingrich, a candidate once left for dead, stood before thousands in a U.S. flag-draped airport hangar in Sarasota brimming with confidence about his chances of winning the Republican nomination. He barely mentioned Romney in two events, though he went hard at Obama.
Gingrich said Obama should stop blaming his Republican predecessor for the country’s economic woes.
“This is the fourth year of his presidency. He needs to get over it,” Gingrich said. “A friend of mine says, ‘He has shifted from Yes We Can to Why We Couldn’t.'”
Records released by Romney’s campaign show he closed a bank account in Switzerland in 2010, as he was entering the presidential race. He also kept money in the Cayman Islands, another spot popular with investors sheltering their income from U.S. taxes. But Benjamin Ginsberg, the Romney campaign’s legal counsel, said Romney didn’t use any aggressive tax strategies to help reduce or defer his tax income.
“Gov. Romney has paid 100 per cent of what he owes,” Ginsberg said Tuesday.
Romney paid about $3 million on nearly $22 million in income in 2010 and indicated his 2011 taxes would be about the same, $3.2 million on nearly $21 million in income.
In 2010, he donated a combined $3 million to the Mormon Church and other charitable causes. His effective tax rate was about 14 per cent, the records showed. For 2011, he’ll pay an effective tax rate of about 15.4 per cent, a level far lower than standard rates for high-income earners, reflecting the lower rate for long-term capital gains.
The tax records may silence Gingrich and others who argued that Republican voters should know the details of Romney’s wealth before they select their presidential nominee and not after. But it also could open up new lines of attack.
After Gingrich’s overwhelming victory in South Carolina, Romney can ill afford to lose Florida’s primary, and he showcased a new aggression from the opening moments a debate Monday night. He said Gingrich had “resigned in disgrace” from Congress after four years as speaker and then had spent the next 15 years “working as an influence peddler.”
The candidates hold another debate on Thursday night.
Texas Rep. Ron Paul, who’s bypassing Florida in favour of smaller, less expensive states with caucuses, returned to Texas after Monday’s debate.
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Associated Press writers Steve Peoples, Kasie Hunt and Brian Bakst in Florida and Connie Cass, Jack Gillum, Stephen Braun and Stephen Ohlemacher in Washington contributed to this report.
