Paul L. Caron
Dean




Wednesday, June 23, 2021

ProPublica: Leading Manhattan DA Candidate/Hedge Fund Mogul Has Repeatedly Paid No Federal Income Taxes

Following up on my recent posts (links below):  ProPublica, Leading Manhattan DA Candidate Has Repeatedly Paid Virtually No Federal Income Taxes:

The leading candidate to take over the investigation relating to former President Donald Trump’s taxes paid virtually no federal income taxes in four of six recent years.

Tali Farhadian Weinstein, who is married to hedge fund manager Boaz Weinstein, is running for Manhattan district attorney in the Democratic primary, in which early voting has already begun. She and her husband reported income as high as $107 million in 2011, and she recently donated $8.2 million to her campaign — more than her seven Democratic rivals have raised in total.

But in 2017, according to a trove of tax data obtained by ProPublica, she and her husband paid no federal income tax. In 2015 and 2013, they also paid no federal income tax. In 2014, she and her husband paid $6,584. ...

The Weinsteins are among thousands of wealthy people whose tax return data ProPublica has obtained. Last week, ProPublica published its first article using the IRS data, which revealed that the 25 richest Americans paid little or no federal income taxes compared to their immense gains in wealth in recent years. This story was not on our initial list of coverage of the IRS data but a ProPublica reporter came across Farhadian Weinstein’s information as part of his ongoing research. With the primary election a week away and the outsized spending by Farhadian Weinstein continuing to draw attention, ProPublica concluded the public interest would be served by letting voters and other taxpayers see her tax history.

New York Times DealBook, A Rare Look Inside a Hedge Fund Mogul’s Tax Returns:

If rich people lose money, should they pay tax?
The article about the Weinsteins may leave some readers thinking there is something off about their taxes. Our reporting says otherwise. For those who have covered Mr. Weinstein’s up-and-down career, as DealBook has, it’s well known that he genuinely and repeatedly lost money for a good stretch of the last decade. His fund, Saba Capital Management, had as much as $5.6 billion in assets under management in 2012 — but so many investors withdrew their money because of poor performance that at one point it fell to $1.3 billion.

We asked Mr. Weinstein for his tax returns and — surprisingly — he gave them to us. We also reviewed the reports his hedge fund provided to investors to check for discrepancies between what he reported to the I.R.S. and the fund’s returns. He has told his investors that 95 percent of his net worth is invested in his funds. ...

Mr. Weinstein appeared to come by his tax bill in a straightforward way: He lost money. Unlike many of the individuals ProPublica highlighted whose net worth went up but they reported no taxable income — like Jeff Bezos and Elon Musk — Mr. Weinstein’s wealth was falling in the years he paid little or no tax. He also used a mark-to-market method for tax filing purposes known as a Section 475 election, which meant he paid taxes on both realized and unrealized gains. ...

ProPublica’s reporting on the tax bills of the wealthiest Americans should incite an important debate in the country. DealBook has been particularly vocal about the need to reform the tax code. The American public might come to the conclusion that the rich should still pay taxes even in years when they genuinely lose money or simply become less wealthy. But that’s not the way the current system works, in reality or in spirit.

Prior TaxProf Blog coverage: 

https://taxprof.typepad.com/taxprof_blog/2021/06/propublica-leading-manhattan-da-candidatehedge-fund-mogul-has-repeatedly-paid-no-federal-income-taxe.html

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