John Paulson Made $5 Billion in 2010

[lothar]

I like how you type that out but don't point out what part specifically.

The bills specifically target investment management in partnerships and force net income to be recognized as ordinary income.

Did you read what I linked to?
If the partnerships transferred their asset/stocks to the individual managers they still only pay a 15% cap gains tax rate.

You may want to check it out in case you missed it.
http://www.bloomberg.com/news/2010-...rease-with-864-million-hedge-fund-payout.html

 

[Phokus]

Did you read what I linked to?
If the partnerships transferred their asset/stocks to the individual managers they still only pay a 15% cap gains tax rate.

You may want to check it out in case you missed it.
http://www.bloomberg.com/news/2010-...rease-with-864-million-hedge-fund-payout.html

1. He's not using a loophole of the levin/rangel bills because those haven't PASSED YET.

2. from your own article:

Under current tax rules, distributions of marketable securities by an investment fund such as ESL Partners to its general partner don’t generate a tax bill, according to Fowler. The general partner can then transfer the Sears, AutoZone and AutoNation stock to its managing members, in this case Lambert and Crowley, who would pay taxes at the capital gains rate if they sold the shares at a profit.

As of Jan. 1, a similar distribution would be taxed as ordinary income under the pending legislation, a step that Congress is taking to prevent private-equity funds from avoiding the higher rate by transferring appreciated securities to individuals, Fowler said.

So it sounds like it's being discussed in Congress, but thanks to the Tea Party sweep, probably won't get passed. That's the point.

 

[WHAMPOM]

Greed is good. I wonder how much he actually paid in taxes. With that kind of money you can buy enough loopholes to avoid paying anything.

Let me see just how I remember to do that, reinvest all your gains, borrow the money to live on, pay no taxes.

 

[WHAMPOM]

The dude paid his taxes I'm sure, unless you can give me a specific loophole he exploited and give evidence supporting this.

Money is power, yes, but you cannot defy the laws of physics no matter how rich you are.

The IRS in the past has released a list (excluding names) of top taxpayers, with the highest tax payers paying hundreds of millions of dollars in taxes. This was years ago before hedge fund managers made $1+ billion.

What $Billionaire was amazed that his secretary paid more taxes then he did?

 

[YoungGun21]

Indulge my ignorance, but what does that mean? Like, what sort of investments/moves did he make to that end?

He bet that they would fall. And he was very, very correct.

 

[blackangst1]

What $Billionaire was amazed has always known that his secretary paid more a higher percentage of her income in taxes then he did?

Corrected for you.

 

[lothar]

1. He's not using a loophole of the levin/rangel bills because those haven't PASSED YET.

2. from your own article:
"Under current tax rules, distributions of marketable securities by an investment fund such as ESL Partners to its general partner don’t generate a tax bill, according to Fowler. The general partner can then transfer the Sears, AutoZone and AutoNation stock to its managing members, in this case Lambert and Crowley, who would pay taxes at the capital gains rate if they sold the shares at a profit.

As of Jan. 1, a similar distribution would be taxed as ordinary income under the pending legislation, a step that Congress is taking to prevent private-equity funds from avoiding the higher rate by transferring appreciated securities to individuals, Fowler said."

Exactly!
They transferred assets before the bills were passed meaning even if it was passed congress wouldn't be able to retroactively change it because the transfer for direct ownership already occurred.

Date of "proposed" bill: April 2009.
Date of transfer: June 2009 or earlier.

Immediately he saw the proposed bill, he transferred the stocks to himself for direct ownership. No doubt all the other mutual/hedge fund managers from Stevie Cohen's SAC Capital to William Ackman's Pershing Square, George Soros, Carl Icahn, and countless of other managers listed there have already done this.
http://www.gurufocus.com/ListGuru.php

Once the law is passed, congress can't say psst: the stocks you transferred to yourself a year or 2 years ago, you need to pay it as ordinary income because it wasn't law when the transfer happened and what he did was certainly legal for that tax year.

I'm not aware of congress passing a law retroactively like that. If they could, they would have something about the millions of dollars in bonuses Kenneth Feinberg allowed to be awarded AIG executives after they were bailed out and became 80% owned by the government.
The only solution I've seen so far is to treat taxes from all sources at the same rate and remove the SS cap income tax limits.

The law specifically targets partnerships and also does not stop CEO's from Google, Apple, Citigroup(doesn't the gov't still own a stake?) and many others from collecting a $1 salary and paying themselves millions in stock options getting a 15% cap gains rate on the difference when they sell and avoids them from paying FICA taxes on the gains.

 

[Phokus]

Exactly!
They transferred assets before the bills were passed meaning even if it was passed congress wouldn't be able to retroactively change it because the transfer for direct ownership already occurred.

Date of "proposed" bill: April 2009.
Date of transfer: June 2009 or earlier.

Immediately he saw the proposed bill, he transferred the stocks to himself for direct ownership. No doubt all the other mutual/hedge fund managers from Stevie Cohen's SAC Capital to William Ackman's Pershing Square, George Soros, Carl Icahn, and countless of other managers listed there have already done this.
http://www.gurufocus.com/ListGuru.php

Once the law is passed, congress can't say psst: the stocks you transferred to yourself a year or 2 years ago, you need to pay it as ordinary income because it wasn't law when the transfer happened and what he did was certainly legal for that tax year.

I'm not aware of congress passing a law retroactively like that. If they could, they would have something about the millions of dollars in bonuses Kenneth Feinberg allowed to be awarded AIG executives after they were bailed out and became 80% owned by the government.
The only solution I've seen so far is to treat taxes from all sources at the same rate and remove the SS cap income tax limits.

The law specifically targets partnerships and also does not stop CEO's from Google, Apple, Citigroup(doesn't the gov't still own a stake?) and many others from collecting a $1 salary and paying themselves millions in stock options getting a 15% cap gains rate on the difference when they sell and avoids them from paying FICA taxes on the gains.

I don't even know what argument you're trying to make anymore... You're complaining that they haven't passed the bill fast enough, which is true and which is something we're not really arguing about.

 

[Brainonska511]

I'm not aware of congress passing a law retroactively like that.

Changes to tax law can be applied retroactively.

In the early 1980s, Congress created a tax deduction to encourage people to sell stock in a company to that company's employee stock option plan (ESOP). To get the benefit of that deduction, Jerry W. Carlton, the executor of the estate of Willametta K. Day, sold stock to an ESOP at a loss. Engaging in what Justice Antonin Scalia later called "bait and switch" taxation, Congress in 1986 repealed the tax deduction and applied the repeal retroactively, costing the estate more than $600,000. Justice Scalia's comment notwithstanding, the Supreme Court unanimously upheld the government's assessment of the tax.

http://www.heritage.org/research/lecture/retroactive-tax-increases-and-the-constitution (and more on that page and others that you can google)

Retroactive taxes are not ex post facto laws.

http://en.wikipedia.org/wiki/Ex_post_facto#United_States

 

[werepossum]

Changes to tax law can be applied retroactively.


http://www.heritage.org/research/lecture/retroactive-tax-increases-and-the-constitution (and more on that page and others that you can google)


http://en.wikipedia.org/wiki/Ex_post_facto#United_States

I'm all for closing this loop hole no matter who does it, by changing the rules after the game is just plain wrong. That it is done to billionaires would not make it less wrong. Although it would make it somewhat more amusing . . .

 

[JMapleton]

What $Billionaire was amazed that his secretary paid more taxes then he did?

It was a misleading argument. Buffett pays most of his taxes via dividends (he makes about $50m a year in dividends from his REIT shares), which are taxed at a lower rate. He owns over $1b in REIT stocks outside of his BRKA shares.

If his secretary had owned REITs, they would have paid the same tax rate.

Buffett's argument was irresponsible and only caused many uneducated people to argue in his favor when they knew nothing about what they were arguing about.

 

[JMapleton]

What the hell is wrong with you? Making the rich richer by using tax dollars to let the rich have irresponsible investment losses repaid is the opposite of socialism.

You are so confused because you just make up what words mean wrongly, and so you blame the solution for the problem.

Thanks to Jhhnn for also pointing out the error in your post well.

My saying 95% of everything said about liberals is wrong or lies here in so many dozens of cases to show how deluded the right is about liberals is having about as much effect on the right as telling crack addicts they'd benefit from quitting. Not because they can show a single example I've posted is wrong - they can't - but because they have three mouths and no ears.

Child molestation? Liberals' fault. Bad drivers? Liberals' fault. Bad television shows? Liberals' fault.

And now, the corruption of our political system by the money of concentrated wealth, which THE RIGHT falls for and sells out to - liberals' fault.

The fact it's the progressives and only the progressives who scream for breaking up 'too big to fail' while virtually all Republicans and corporatist Democrats have sold out the public to the corporatocracy is utterly lost on these ignorant people who 'blame liberals' for this, too, just as they're propagandized too, spitting in the face of any American who has ever foolishly suggested the people are capable of self-government. If we are, it's only by having people like this be few in number.

You're playing a two faced game in your argument. Typical in political arguments.

You're arguing in favor of true socialism and then arguing against these neo-conservative policies, which have been paraded around as "capitalism" by the GOP.

Yes, true socialism would have done no such thing. But just as true communism has never existed, true socialism rarely exists because when you get rid of the greedy capitalists you still cannot get rid of the greedy politicians.

You're arguing in favor of something that does not exist and will never exist.

I advocate just getting rid of government as much as possible because I trust the businessman more than I trust the politician. But you cannot have your cake and eat it too.

 

[Darwin333]

Why? It wasn't income.

The fuck it wasn't.

 

[JMapleton]

The fuck it wasn't.

It wasn't payroll income. It was capital gains/dividends.

 

[werepossum]

It wasn't payroll income. It was capital gains/dividends.

But that is a distinction made by Congress, not an inherent natural distinction. I recognize the original reason - to promote economic growth and investment - but increasingly these capital gains are from bets, going long or going short or money trading or day trading or options trading, with a distinct winner and a distinct loser rather than increased societal wealth. A corporation selling stock increases its ability to create wealth (at least in theory), but the person whose short call pays off saves or spends the money earned exactly as the person whose long position lost that money, as far as society is concerned. (Arguably it's even worse, as the most successful hedge funds are going to be patronized by the wealthiest clientele, thereby increasing wealth stratification.) And to the extent that these earnings are from management fees and/or bonuses rather than increase on actual money placed at risk, the distinction is even more artificial, nothing more than the New York contingent establishing a loophole to keep more money in New York City rather than flowing to D.C. as taxes.

Personally I think all capital gains taxation needs to be revisited. Either tax it all as income, or find some logical consistent separation for money risked versus not risked, or at the very least separate out the fund manager's earnings and short term deals. And if the hot dog vendor on the corner of Wall Street has to pay double payroll taxes, then so should the hedge fund manager.

 

[Fern]

nm
Fern

 

[Vic Vega]

Greed is good. I wonder how much he actually paid in taxes. With that kind of money you can buy enough loopholes to avoid paying anything.

Bwwhhahahhahahhaaaa

 

[HeXen]

yet some guy who made $30,000 last year and lied on his taxes makes no news every day. Some mega billionaire smart enough to get himself to a legacy of riches for generations to come, whatever he pays in taxes...good for him i say. If any of you could become super rich too, you wouldnt complain.
Maybe this is why rich people don't hang out with the poor

 

[werepossum]

yet some guy who made $30,000 last year and lied on his taxes makes no news every day. Some mega billionaire smart enough to get himself to a legacy of riches for generations to come, whatever he pays in taxes...good for him i say. If any of you could become super rich too, you wouldnt complain.
Maybe this is why rich people don't hang out with the poor

I say good for him too. And I personally don't think very high earners morally should pay a higher percentage than does the middle class.

However it's very hard to argue they should pay a lower rate because of an artificial division of income - a division, by the way, enacted by other rich people.

 

[Hayabusa Rider]

I think he should go to jail for what he did. After all I didn't make a cent on this

 

[werepossum]

I think he should go to jail for what he did. After all I didn't make a cent on this

LOL That isn't far from the stereotypical progressive position:
"This man made a lot more money than me. That makes him evil. And even though I don't know him and had absolutely nothing to do with him earning that money, I feel victimized and entitled to have most of it redistributed to me and however many others like me it takes to make it so."

 

[Jhhnn]

LOL That isn't far from the stereotypical progressive position:
"This man made a lot more money than me. That makes him evil. And even though I don't know him and had absolutely nothing to do with him earning that money, I feel victimized and entitled to have most of it redistributed to me and however many others like me it takes to make it so."

Fantastic strawman. Rush would be proud.

 

[werepossum]

Fantastic strawman. Rush would be proud.

Progressives must be terrified of fire, what with perceiving themselves being surrounded with straw men every way they turn.

Just to help educate you, a straw man is a gambit in debate by which one party constructs a position superficially similar to his opponent's, but with a built-in flaw. By exploiting the flaw, he then apparently wins the point by tearing down the straw man position he has created for his opponent rather than tackling the opponent's actual position. Progressives, being typically stuck on stupid and running on emotion, continually insist on labeling as a straw man any statement with which they disagree, to the amusement of those around them.

Note especially that in this position I was not arguing the many fallacies in progressive thought feeling. I was merely poking fun at you. There IS a difference and, if one wishes to not be thought a fool, one might wish to learn it.