Romney's tax return headache

Romney's tax return headache

Mitt Romney is running into tax trouble.

The GOP presidential front-runner said Tuesday that he “probably” pays a tax rate of about 15 percent, providing additional fodder for critics already calling on Romney to release his tax returns.

The admission, days before a South Carolina primary where Romney is the prohibitive favorite, is also likely to play into a general-election contest that seems destined to be fought along lines of class.

President Obama is calling for tax rates on the wealthy to be increased, including the capital gains tax. He has trumpeted billionaire Warren Buffett’s argument that the rich should pay higher taxes, echoing Buffett’s argument that he should pay a higher tax rate than his secretary.

Democrats are likely to argue that Romney, whose net worth is thought to be in the range of $200 million, is paying a lower tax rate than much of the middle class.

Romney, who has come under pressure from Republicans and Democrats alike to release his tax forms, said most of his income is in long-term capital gains, which is hit with a 15 percent rate.

"It’s probably closer to the 15 percent rate than anything, because my last 10 years, I’ve — my income comes overwhelmingly from investments made in the past, rather than ordinary income, or rather than earned annual income," Romney said during a press conference in Florence, S.C. "I get a little bit of income from my book, but I gave that all away. And then I get speakers’ fees from time to time, but not very much."

Since the Bush tax rates, including the 15 percent capital gains rate, are set to expire at the end of this year, taxes will be a huge campaign issue this fall.

While Romney would extend all of the Bush tax cuts, Obama would allow tax rates to rise on annual income above $250,000 for families and $200,000 for individuals.

Obama would also hike the capital gains tax on wealthier households.

Romney opposes raising the tax on capital gains; his tax plan proposes maintaining the current tax rate and eliminating it for individuals with an adjusted gross income below $200,000.

But unlike some conservatives, who argue all capital gains taxes should be eliminated to prevent double taxation, Romney said Tuesday he would keep some capital gains tax in place.

Romney referred to Buffett’s argument that high-income individuals might end up with a zero percent tax rate if the tax on capital gains were eliminated.

"I just don’t think that’s the right course," he said. "With our precious dollars, we should focus on providing relief, tax relief, in two areas: One is for middle-income Americans, who have been hurt the most, and the other is to bring our corporate rates to a level where we could draw people from other countries to bring their funds back in this country."

Democrats focused their attacks on Tuesday on Romney’s failure so far to release his tax returns. During a Monday night GOP debate, Romney suggested he would do so in April.

“It’s not for us to call on someone to release his tax records, but it is an established tradition for presidential candidates to release their tax records,” White House press secretary Jay Carney said Tuesday.

Separately, Democratic National Committee Vice Chairman R.T. Rybak criticized Romney for “setting a new standard of lack of transparency.”

On a conference call, Rybak said Romney’s failure to release his tax returns illustrated his two greatest weaknesses as a candidate: that he “won’t level with people” and “can’t make up his mind.”

GOP strategist Ron Bonjean said Romney’s campaign must release the tax returns “sooner rather than later” in order to cut off his opponents’ line of attack.

“Every day that goes by that he doesn’t release the returns is another day the Democrats and his Republican opponents can hammer him on it,” Bonjean said. Romney has also taken heat from the right on the issue.

Rick Perry, Newt Gingrich and Rick Santorum — Romney's rivals for the GOP nomination — all called on Romney to release his tax returns this week, for the sake of transparency.

Gingrich doubled down on Tuesday, telling conservative radio host Laura Ingraham that Romney needs to release his tax returns before South Carolina votes.

An editorial in The New York Times published Tuesday accused Romney of “hedging” and called on him to release his returns immediately.

“Candidates for the presidency are not legally required to release their tax records, but they generally have for many years now — because American voters have a right to know how the men and women who want to be president make their money,” according to the Times’s editorial board.

The Times and the White House both touted 1968 Republican presidential candidate — and Mitt Romney’s father — George Romney as a prime example of a candidate releasing his tax returns. As a candidate, Romney’s father released 12 years’ worth of tax returns.

Bonjean suggested Romney might be more “sensitive” about the issue of his personal finances than he has been with other issues in his campaign.

“Let’s say he released his returns and another candidate would have beat him, it would have been for nothing. He would have released personal information for absolutely no reason whatsoever,” Bonjean said. “I can see the value in delaying the release; however, it will soon be time for him to do so, once it’s clear he is going to be the nominee.”