Mitt Romney's wealth in spotlight again after tax probe

New evidence of Republican candidate's low payments follows poor TV ratings

The source of Mitt Romney's personal wealth continues to generate awkward headlines after it emerged that regulators have subpoenaed Bain Capital, the private equity firm he once headed, during an investigation into its tax arrangements.

New York's Attorney General, Eric Schneiderman, is seeking internal documents that will establish whether Bain – along with 11 other firms – has been forgoing management fees in favour of investments in the funds which they manage. Investments are taxed at a far lower rate than ordinary income.

The practice falls into a legal grey area. Some lawyers consider it an aggressive but legitimate means of tax avoidance; others believe it strays beyond the bounds of legality. Bain Capital is believed to have used it to avoid paying around $220m (£138m) in taxes, according to The New York Times, which broke news of the subpoena at the weekend.

Mr Romney left Bain over a decade ago, but continues to profit handsomely from his ties to the firm, and in the past two years earned roughly $13m from his share of its profits. A spokesman yesterday insisted the tax strategy at the centre of Mr Schniederman's probe is "a totally legal practice".

Mr Romney's financial arrangements have been an electoral talking point for months. The Republican candidate, believed to be worth upwards of $250m, continues to ignore calls to follow the protocol followed by almost every modern predecessor by releasing up to a decade's worth of his federal tax returns.

Instead, his campaign has published information relating to just the past two years. It reveals Mr Romney has a Swiss bank account, squirrels some of his fortune away in such tax havens as the Cayman Islands, and last year paid 15 per cent tax, roughly half the rate of a middle-class American.

Democrats have used the issue to vilify the Republican, portraying him as a predatory capitalist whose wealth puts him out of touch with ordinary voters. They have speculated that in recent years the multimillionaire may have paid almost no income tax.

Mr Schniederman's subpoena, which was filed in July, gives further legs to that narrative. Critics, who point out that the Attorney General is a Democrat, have argued that the entire investigation is politically motivated.

There are nonetheless signs that negative attacks against Mr Romney are working. TV ratings for last week's Republican convention in Tampa were down 30 per cent from 2008, and early polls have put his post-convention "bounce" at between zero and four per cent, which is at the lower end of expectations.

Though Romney is believed to have performed competently, there is little sign that Tampa will result in a sea-change in this election. His speech accepting the Republican nomination was overshadowed by coverage of Clint Eastwood's bizarre appearance, in which he conducted a rambling conversation with an empty chair. Vice-presidential candidate Paul Ryan was meanwhile criticised by fact-checking organisations for a string of alleged inaccuracies in his speech.

On Saturday, the Republican ticket faced further embarrassment when Mr Ryan admitted that he "misspoke" in a recent interview, when he claimed to have completed a marathon in "two hours fifty-something". An investigation by Runner's World magazine had established that the candidate, a self-proclaimed fitness fanatic, had in fact only finished one marathon, in 1990. It took him more than four hours.

The mis-steps have delighted the Obama camp, which this week touches down in Charlotte, North Carolina, for the Democratic convention. However, the event also presents them with a pertinent challenge: after months of negative campaigning, they must outline a positive vision for their candidate's second term.

Highlights of the three-day event, which begins tomorrow, include a scheduled speech by Elizabeth Warren, the party's senatorial candidate in Massachusetts, who has been a stern critic of Wall Street excess, and an appearance by Bill Clinton.

What's brewing in the President's basement

When he puts his feet up at the end of another long, hard day, Barack Obama likes nothing better than to blow the top from a cold glass of home-made novelty beer.

The White House has released recipes for two home-brews to have come out of a micro-brewery which the President has established in his basement.

One is a light honey ale made from high-end hops imported from Kent and honey from the beehive on Obama's south lawn. The other, a Honey Porter, gets a darker, heavier texture from a dose of chocolate malt.

The recipes, along with a video showing the beer-making process, were revealed on the White House website after 25,000 people signed a petition asking to read them.