Updated: February 8, 2012 10:42AM
WASHINGTON (AP) — A day before Republican presidential candidate Mitt Romney planned to release his income tax returns, his old investments in two controversial government-backed housing lenders stirred up new questions at the same time his campaign targeted rival Newt Gingrich for earning more than $1.6 million in consulting fees from one of the lenders.
Romney’s latest financial disclosure report listed several investments, worth as much as $500,000, in U.S.-backed lenders Fannie Mae and Freddie Mac. Romney, Gingrich and other GOP critics repeatedly have singled out the two quasi-government entities as prime villains in the housing crisis that played a central role in the nation’s long and deep recession.
While continuing to hammer Gingrich for his consulting work for Freddie Mac, the Romney campaign sought to deflect questions about the former Massachusetts governor’s investments. They include a mutual fund worth up to $500,000 that includes assets from both lenders among other government income, and separate investments in each of the lenders in Romney’s individual retirement account, each worth between $100,000 and $250,000.
Romney campaign officials said Monday that a trustee handles the investments and that Romney had no role in choosing or managing them.
The dimensions and the sources of Romney’s wealth, which he has estimated to be as much as $250 million, have become a central issue in the roiling GOP primary campaign. For months, Romney dismissed calls to release his personal income tax records. But after mounting criticism from his rivals and others, coupled with his stinging weekend loss to Gingrich in the South Carolina primary, Romney agreed to release his 2010 return and 2011 estimate. Both sets of records could provide new details about his investments and his annual take as founder of the Bain Capital private equity firm.
Romney’s tax returns are likely to sketch out critical information about the tax strategies he employs. Tax experts said these likely include his use of a low 15 percent capital gains rate to reduce the taxes he pays on dozens of large investments that flow into his blind trust, charitable donation strategies that benefit philanthropies but also further reduce his tax burden and investments routed through offshore affiliates that could help him defer some tax payments.
Romney already has acknowledged that his current tax rate is about 15 percent, a level far lower than standard rates for high-income earners and similar to the capital gains rate. But some tax law and tax policy experts suggest that Romney likely has paid similarly low rates throughout his Bain years, continuing through the 13 years since he left the firm.
Joseph Bankman, a Stanford University business and law professor who has testified before Congress on the taxes paid by private equity firms like Bain, said Romney’s background as a financier, coupled with his growing wealth and ability to use sophisticated tax tactics, makes it highly likely that he has paid taxes at the going capital gains rate for most of his career.