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Opponents Hammer Emanuel On Taxes, Freddie Mac

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Gery Chico, Carol Moseley Braun and Rahm Emanuel

Chicago mayoral candidates Gery Chico, Carol Moseley Braun and Rahm Emanuel (CBS)

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UPDATED 02/11/10 8:01 a.m.

CHICAGO (CBS) – The gloves have come off in the race for Mayor, with the rest of the field setting its sights on frontrunner Rahm Emanuel.

Both Gery Chico and Carol Moseley Braun launched attacks on Emanuel on Thursday, focusing on his “luxury services” tax proposal and his ties to mortgage giant Freddie Mac.

CBS 2 Chief Correspondent Jay Levine reports on the potential fall-out.

Emanuel has proposed cutting the city’s portion of the sales tax from 1.25 percent to 1 percent and spreading the sales tax to so-called “luxury services.”

But Emanuel hasn’t specified what services he would tax, leaving open the question of whether his proposal would really be a tax hike for most Chicagoans.

Chico has been hammering Emanuel’s proposal for days, saying Chicago taxpayers don’t need another new tax.

On Thursday, he let the dogs out, staging a press conference at a Chicago dog groomer, one of the businesses that Emanuel’s campaign has said would be taxed under his proposal.

LISTEN: Newsradio 780’s Bob Roberts reports

The event was the latest in Chico’s series of campaign events and commercials attacking what Emanuel has called a 20 percent sales tax cut. Chico calls it “The Rahm Tax.”

Dogs at the salon upstaged Chico, as he said he is the pet-lover’s friend.

“There are hundreds of thousands of hardworking Chicagoans that have pets in the city,” Chico said, interrupting to talk to a dog that misbehaved. “Don’t eat the sign. We need that sign.”

Chico said he is not the candidate of the fat cats.

“For the first time in my history, I’ve been known as the guy protecting the millionaire loophole,” Chico said. “You’ve got to be kidding me.”

Chico called the Emanuel tax proposal irresponsible and unworkable. He said Illinois lawmakers have tried and failed to find a mix of services to tax.

Quoting George H.W. Bush when he was running for president in 1980, Chico called Emanuel’s plan “voodoo economics.”

Emanuel has focused on his plan to cut the sales tax rate, while saying that it should be expanded to so-called “luxury services” to make up for the lost tax revenue.

But Emanuel hasn’t offered specifics on what services would be taxed, saying that needs to be negotiated with state lawmakers, who would have to sign off on any changes to the sales tax.

“You guys have asked for this list of services that are going to be taxed. You haven’t gotten an answer,” Chico told reporters on Thursday.

Apparently, the dogs are out of luck, according to Emanuel campaign spokesman Ben LaBolt. Dog grooming would be one of the services Emanuel would look to tax.

“Even the dog knows it’s wrong to give tax preferences for mango-scented doggy facials,” LaBolt said.

Both Chico and Carol Moseley Braun also hammered away at Emanuel’s knowledge of the mortgage meltdown.

Emanuel served on the board of mortgage giant Freddie Mac when it misstated its earnings by $5 billion for 2000 to 2002. Top executives were forced out when the problem was uncovered in 2003.

Emanuel was paid $400,000 as a board member at Freddie Mac.

“We have asked Rahm about what happened on Freddie Mac,” Chico said.

“This housing meltdown that we experienced started then because they miscounted … as much as $9 billion. Once that accounting error was revealed … the house of cards started to come down,” Braun said.

Asked what Emanuel knew about the problems at Freddie Mac and when he found out about the misstated earnings, LaBolt said, “Emanuel was not named in any report on the matter.”

However, one federal investigation said the entire board at the time “failed in its duty to follow up on matters brought to its attention.”

Still another critic, a major national labor leader, on Thursday called Emanuel’s consideration of privatizing city services ridiculous, urging him to “be a leader”.

While Emanuel has been endorsed by some local labor unions, the majority have either gone with Chico, or remained neutral. However, the results of recent polls indicate the rank and file may not yet be following their officers’ lead.

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