Why Boaz Weinstein Paid Little in Income Tax

ProPublica published last week an article on the tax records of Boaz Weinstein, the multimillionaire hedge-fund manager who was famous for placing bets against the JPMorgan Chase trader, the “London Whale”. The article stated that Mr. Weinstein and Tali Farhadian Weinstein are running for Manhattan district attorney. They may inherit an investigation into Donald Trump’s New York State taxes.

It was the latest in a series of articles ProPublica created based on a treasure trove private I.R.S. The data details the taxes of America’s most wealthy individuals. The package’s main thesis states that “it demolishes the cornerstone myth” of America’s tax system, that is, that everyone pays their fair part. The article on the Weinsteins stated that Ms. Farhadian Weinstein ran for office and made their tax history public.

Some readers may feel that there are some tax issues in the article about the Weinsteins. 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. Saba Capital Management had assets of $5.6 billion under management in 2012. But so many investors lost their money due to poor performance that it dropped to $1.3 billion at one point.

We asked Mr. Weinstein to provide his tax returns. We also looked at the reports that his hedge fund provided investors to see if there were any discrepancies in what he reported to I.R.S. and the fund’s return. He has told his investors that 95 percent of his net worth is invested in his funds.

  • The tax returns show that the Weinsteins paid $86.3million in federal taxes from 2010 to now and $37.7million in New York State and City taxes for a total amount of $124 million. The couple’s adjusted gross income during the same period was $288.9 million; their taxable income was $246 million, lowered in part by $29.5 million in philanthropic gifts.

Mr. Weinstein appeared to have paid his tax bill straight away. He actually lost money. Contrary to many others ProPublica highlighted who had a higher net worth but reported no taxable income, such as Jeff Bezos or Elon Musk, Mr. Weinstein’s wealth fell in years when he paid very little or no tax. He also used the Section 475 election method to file taxes, which means he paid taxes for both realized and unrealized gains.

  • In 2012, Mr. Weinstein’s flagship funds were down 3.87%, 6.75% in 2013, and 10.81% in 2014. It eked out a 3.37 percent gain in 2015 and then a 22 percent increase in 2016. His fund lost 8.9% in 2017, before posting an 11. percent gain in 2018. He posted a stunning gain of 73% in 2020, after a loss of 12.8 per cent in 2019.

ProPublica reported on the tax bills of America’s wealthiest citizens. This should provoke a debate within the country. DealBook was particularly vocal in support of reforming the tax code. American citizens may conclude that tax should be paid by the wealthy even when they are losing money or becoming less wealthy. It’s not how the system currently works in reality.

The big money behind New York City’s mayoral race. A group of billionaires has spent $16,000,000 on super-PACs. This was the first city mayoral election to feature these groups. Most of those donations — coming from the likes of Steve Cohen, Dan Loeb and Ken Griffin — have benefited three moderate Democratic candidates: Eric Adams, Andrew Yang and Ray McGuire. Tomorrow’s primary elections are over.

Bill Ackman’s SPAC seals its deal for a piece of Universal Music Group. Pershing Square Tontine formally agreed to buy 10 percent of the music label from Vivendi for $4 billion, in a complex transaction that would see Universal go public — and also create two other Ackman-run investment vehicles. The deal faces opposition of some Vivendi investment funds, who are scheduled to vote on it tomorrow.

Countries close on a global tax overhaul According to Politico, an international agreement to establish a global minimum tax as well as impose additional levies against multinational companies might be reached by December 31, according to Politico.

Million-dollar vaccination lotteries fall short. Despite a promising start, state efforts to entice people to get inoculated with big paydays haven’t reversed the decline in adults getting shots.

American Airlines cancels an entire wave of flights. Largely due to staff shortages, hundreds of flights were cancelled over the weekend. Its troubles highlight the challenges carriers face in trying to ramp up after pandemic lockdowns to capture a pickup in demand for travel.

Soaring lumber prices have driven up the cost of new homes and built a foundation for the argument that government stimulus programs were setting off runaway inflation. As production increases and customers put off buying, lumber prices plummeted. Some believe this is a good sign of things to come for the rest.

It’s an eloquent “dance” of supply-demand writes The Times’s Matt Phillips. “This has reassured many professionals and the Federal Reserve in believing that painful price increases for everything from used cars to airline tickets will decrease as the economy goes back to normal.”

Beyond lumber, conditions for accelerating inflation exist, but are not insurmountable. The Fed has pumped trillions into the markets and maintained low interest rates, while the federal government has experienced record deficits due to spending to accelerate the economic recovery. But inflation is partly a psychological phenomenon, taking root when investors and consumers believe prices will inevitably rise. The behavior in the lumber market shows cooler heads, said Kristina Hooper of Invesco, and there are signs that this attitude is spreading. She stated that “we don’t have the kind of buying frenzy which creates sustained inflation.”

Daily Business Briefing

Numerous surveys have revealed that workers are eager to quit their jobs. This “turnover tsunami” is well under way: According the Labor Department, nearly 4,000,000 Americans left their jobs in April — which was the highest ever recorded. Economists believe there are several factors at work.

  • The backlog of quiters. In the peak of the pandemic, less people left their jobs than before. Many people feel more at ease leaving their job now that the economy is recovering.

  • The economy has reopened quickly. Businesses have seen a rapid increase in demand, which has led to a boom of job openings. Many opportunities are available for those who are looking to retire.

  • Some workers were left with less money due to the pandemic. This allows them to have more cushion in case of an unexpected increase in unemployment.

  • Some workers have reexamined their lives. They may have decided to spend more time with their families, start businesses, look for a job that allows remote work or change careers.

Economists predict that the unusually high rate at which people quit will continue. But many businesses are reacting by taking the action that is likely to eventually tamp down turnover: Companies including Amazon, Bank of America, Chipotle and McDonald’s have raised pay.

To learn more about why so many workers quit, see Sydney Ember’s complete article in The Times .

Environmental, social and governance issues are increasing the tension between public companies, their shareholders and regulators. The S.E.C. has been under pressure from companies. as the commission considers mandatory climate-change disclosures. After many successful proxy fights and a number of successes, activists shareholders have decided that E.S.G. is the best way to protect their gains. After several successful proxy fights, it’s activist shareholders who have decided that the only way they can preserve their gains on E.S.G. is to sue S.E.C. to court.

Shareholder resolutions on E.S.G. have been 75 percent more successful this year than last, according to the Interfaith Center on Corporate Responsibility. The I.C.C.R. is suing S.E.C. because a change made by the commission last year to an established rule regarding shareholder proposals could make it more difficult for shareholders.

The question is how much stock must a shareholder own to be able to propose a resolution and vote at the annual meeting. Currently, in most cases it is $2,000 worth. The S.E.C. If the shares are held only for one year, the S.E.C. intends to raise it to $25,000 Groups of shareholders cannot pool their ownership to meet the minimum.

  • The I.C.C.R. According to its complaint, I.C.C.R. contends that the new rules “severely inhibit shareholders’ access [to the proposal] process.” This process allows for investors to voice concerns and engage management in a “give and takes,” Josh Zinner from the I.C.C.R. told DealBook. He said that resolutions don’t go to a vote because companies don’t agree to participate.

It was a very political rulemaking, Zinner said about the S.E.C.’s amendment process. The stricter requirements passed despite “overwhelming” shareholder objections, he said. Gary Gensler, the new chairman, has brought about some change, but it still remains to be implemented those new rules. The current S.E.C. direction is encouraging, Zinner said. is taking,” Zinner said, noting movement toward mandatory climate disclosures and other signals that Gensler’s S.E.C. is shifting gears, including by possibly reversing recently passed rules like the one about shareholder proposals (over the objections of conservative commissioners).

Deals

  • Despite being publicly rejected, Clayton, Dubilier & Rice, the American buyout company, plans to pursue its $12B takeover bid for Wm Morrison, a British supermarket chain. ( FT).

  • Troubled companies like oil drillers and retailers are hoping to duplicate AMC Entertainment’s success in courting retail investors. (, WSJ ).

  • How Toshiba tried to enlist the Japanese government’s help in fending off activist investors. (

Politics

  • Meet Natasha Sarin. A 32-year-old Larry Summers protégée who is leading the White House effort to clamp down on tax evasion. ( NYT

  • Trump Administration lawyers have difficulty finding new work. (Bloomberg)

Tech

  • Shares in Alphabet and Facebook are starting to leave those of their fellow tech giants in the dust. (WSJ)

  • Texas power companies remotely raised some customers’ thermostats in the middle of a heat wave. ( Insider).

Best of

  • U.S. lawmakers are moving to eliminate the secrecy of big-ticket art sales to combat money laundering. (NYT)

  • The North Face clothing brand owner quietly removed public criticisms of forced labor in China’s Xinjiang regions. He then, more quietly, reinstated it. (, WSJ ).

  • French pro soccer could collapse under the $400 million media rights conflict. (NYT)

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