Will Romney's tax figures hurt him at the polls?

Details of Romney's tax records
Details of Romney's tax records

    JUST WATCHED

    Details of Romney's tax records

MUST WATCH

Details of Romney's tax records 02:53

Story highlights

  • Mitt Romney made $42.7 million over the past two years and paid $6.2 million in taxes
  • Romney's 13.9% effective tax rate is higher than that of the majority of Americans
  • But critics will use the figures to paint him as out of touch with ordinary voters, analysts say
  • Obama is likely to focus on the issue of income inequality as he campaigns for re-election
With the release of his tax figures for the past two years, Republican presidential hopeful Mitt Romney may be hoping to move the political debate on to other matters.
The documents reveal he made $42.7 million over the past two years and paid $6.2 million in taxes, with an effective federal income tax rate of just under 14%.
But will the release of the figures do more to help him or harm him with American voters, many of whom are hurting in the long economic downturn, as he heads into Florida's primary and beyond?
Romney's decision to make the figures public follows challenges to do so from rival Republicans -- among them former Speaker Newt Gingrich, who has released his tax figures -- and his own disappointing showing in the South Carolina primary.
While some analysts are dissecting the minutiae of his tax returns, others are questioning whether the publicizing of the former Massachusetts' governor's huge wealth may do more to harm him in the long run, as his rivals seek to paint him as a man who is out of touch with Joe Six-Pack.
Contrary to popular perception, Romney's 13.9% federal income tax rate is still above that of many Americans -- 80% of whom have an effective rate below 15%.
Romney releases taxes, attacks Obama
Romney releases taxes, attacks Obama

    JUST WATCHED

    Romney releases taxes, attacks Obama

MUST WATCH

Romney releases taxes, attacks Obama 02:47
Mitt Romney's tax records broken down
Mitt Romney's tax records broken down

    JUST WATCHED

    Mitt Romney's tax records broken down

MUST WATCH

Mitt Romney's tax records broken down 02:40
Romney's taxes are by the book
Romney's taxes are by the book

    JUST WATCHED

    Romney's taxes are by the book

MUST WATCH

Romney's taxes are by the book 03:21
Report: Romney 15% tax rate not unusual
Report: Romney 15% tax rate not unusual

    JUST WATCHED

    Report: Romney 15% tax rate not unusual

MUST WATCH

Report: Romney 15% tax rate not unusual 01:58
But just how many millions he has may come as a surprise to some people who are still getting to know the Republican field, said Stephen Craig, professor of political science at the University of Florida.
Romney has handled the tax issue "very, very clumsily," Craig said -- and the fact he hasn't released more than two years' worth of returns "suggests that he still doesn't quite get it."
While his tax figures don't disclose any wrongdoing, Craig added, "the question is whether voters are going to be dumbfounded by the amount of money that he made last year -- and they might be."
That said, Craig added, Americans typically don't mind electing rich people to office.
Chris Edwards, director of tax policy at the Cato Institute, a Washington-based think tank, echoes that view.
"If Romney has followed the laws and hasn't broken the rules, this isn't going to hurt him," Edwards said. "Disclosing it this far away from the (presidential) election made a lot of sense."
If Romney wins his party's nomination and runs against President Barack Obama in November, he can expect to hear a lot of "tax the rich" rhetoric from Democrats opposed to the 15% tax rate for capital gain and dividends, brought in under former President George W. Bush, Edwards said.
But he doesn't believe Romney's wealth -- much of which stems from his time at Bain Capital, the private equity firm he founded in 1984 and left in 1999 -- will be a make-or-break issue for many voters.
"I don't think Americans begrudge wealthy people when they earn their money in a fair and productive manner, and what has come out of the 15 years that Romney headed Bain Capital was that it was a very successful investment company -- there's nothing that suggest they did anything unethical."
What Americans do begrudge is crony capitalism, Edwards said -- and Gingrich may have more to fear on that score, given his links to lobbyists and questions over his work for mortgage company Freddie Mac.
Republican contender Rick Santorum, campaigning Tuesday in Florida, noted that he did not have Romney's riches -- but also made the point that many of his fellow countrymen value achievement.
"I don't begrudge anyone for being successful... I mean, he's done a lot of things with his life, he didn't inherit anything, he's worked hard for it," the former Pennsylvania senator told reporters, referring to Romney.
But Santorum also said his own "less high-flying" life would make him better equipped than Romney to connect with ordinary Americans.
And that image of his vast wealth putting him out of touch with the "average American," struggling with high unemployment and stagnant wages, may well prove Romney's real Achilles heel.
Whatever the outcome of the Republican nomination battle, there's no question the issue of income inequality is going to be a hot topic in campaigning for November.
Obama was expected to highlight it in his State of the Union address later Tuesday.
Speaking Monday, White House spokesman Jay Carney said Obama believes "our tax system needs to be fixed so that billionaires don't pay a lower rate than working-class, middle-class Americans."
The president "believes that it is not fair -- inherently not fair that those who are millionaires and billionaires pay at a lower rate than average Americans who are struggling to get by, especially after a decade where the middle class has been squeezed while the top 1 percent has seen its wealth grow considerably," Carney added.
Paul Begala, a Democratic strategist and adviser to the pro-Obama SuperPAC Priorities USA Action, also flags the issue of inequality, contrasting Obama's rise from a poor background with that of Romney, whose father was a governor and millionaire businessman before him.
Begala contends that Romney "used those advantages to enrich himself at the expense of the middle class. The contrasting narratives of the two candidates is striking -- almost Dickensian."
He says Romney's tax returns pose a number of political problems, not least his "belief his belief that millionaires and billionaires should pay a lower tax rate than cops and construction workers."
Begala also questions Romney's investments in places like the Cayman Islands, Luxembourg and Switzerland. "Legal, no doubt, but not exactly where the average American invests her money," he said.
However, in the eyes of Kevin Hassett, director of economic policy studies at the American Enterprise Institute, Obama's expected attack on low taxes for the rich in his State of the Union address is "indefensible" and indicates that he "doesn't understand where investment comes from."
Such arguments go against sound economic research indicating that a lower tax rate on investment helps stimulate growth and create jobs, he said.
"It's good for the economy, good for growth, good for workers because it means capitalists invest in the businesses here rather than abroad," he said.
Many other countries, including European nations to the left of the United States politically, tax investment at lower rates in order to attract growth, Hassett said, and anyone who tries to make a lower tax rate on investment look bad is doing so for political reasons, whether they are Republican or Democrat.
David Cay Johnston, a tax and accounting columnist for Reuters, took a different view in a CNN interview.
"The scandal here is not the Romneys, who have complied with the law in every way," he said. "It is the law that requires you and me to be taxed differently and much more heavily than a very small group of people -- those who run funds of the kind that Mr Romney does."
In the end, whatever the rights and wrongs of U.S. tax policy, the key for Romney in the current economic climate is to convince ordinary Americans he understands their needs, said Edwards, at the Cato Institute.
While American voters are concerned about the rich paying their fair share in taxes, it's not their top priority, he said -- and Romney needs to capitalize on his strengths.
"The main issue is jobs and the economy -- and Romney can make a good case that he is the best person to manage that," he said. "It's much better that he's a successful businessman than a failed businessman."