Hedge Fund schemers are the modern version of robber barons. At the top of the list of unscrupulous manipulators is the Nazi collaborator, George Soros. With reports like in Forbes that George Soros May Owe Billions In Taxes, an alarm should go off to all investors.
“By the early 2000s, hedge funds were considered de rigeur for sophisticated investors willing to take a risk in exchange for potential wealth. As that potential wealth grew, so did the potential tax bill, and managers began looking at other options. The solution? Investing in offshore hedge funds. Hedge fund managers are generally taxed on income in the country where the fund is located making relocating to the usual offshore suspects such as the Caymans, Bermuda and Ireland attractive. Tax was essentially deferred on fees from these funds until it landed in the hands of those in the U.S.”
The 2008 financial meltdown had all the Wall Street elites scrambling to protect their investment, while avoiding the day of reckoning with the tax man. One such effort as Forbes cites allowed for another deferred work around.
The change was inserted into the Emergency Economic Stabilization Act of 2008 (Public Law 110-343) – and if that sounds familiar, you’re not imagining it. That law was also instrumental in the administration of the Troubled Assets Relief Program, or TARP. The new law essentially banned the deferral of fees and compensation by these offshore hedge funds.
Moving the domicile for the Soros fund to Ireland was an attempt to circumvent the intent of an ill-written law.
The Street lays out the basis for the enormous tax bill coming due.
“At the end of 2013, Soros—through Soros Fund Management—had amassed $13.3 billion through the use of deferrals, according to Irish regulatory filings by Soros.
Congress closed the loophole in 2008 and ordered hedge fund managers who used it to pay the accumulated taxes by 2017. A New York-based money manager such as Soros would be subject to a federal rate of 39.6 percent, combined state and city levies totaling 12 percent, and an additional 3.8 percent tax on investment income to pay for Obamacare, according to Andrew Needham, a tax partner at Cravath, Swaine & Moore. Applying those rates to Soros’s deferred income would create a tax bill of $6.7 billion.”
Now this background provides the business analysis but far more important is the relevance of the political clout that Soros has wheeled for decades and how that influence will effect if he will actually pay his tax bill.
Review the long laundry list of Organizations Funded Directly by George Soros and his Open Society Institute that have received direct funding and assistance from George Soros.
Note that the deadline for payment is 2017, just after the next election. Image the next puppet taking office using an executive order to further delay or water down the actual collection of the Soros tax obligation.
It should be self-evident that the weight of Wall Street influence will be enormous in the 2016 Presidential coronation.
Dismiss the obvious hypocrisy of advocating for higher taxes while avoiding your own tax payment and focus on the actual results.
“A manager with Soros’s track record who started with $12 million from investors, took 20 percent of the profits, and reinvested that money tax-free over 40 years, would end up with $15.9 billion. If that same manager paid federal, state, and local taxes on the fees and related investment gains before reinvesting them, the figure would shrink to $2.4 billion…”
This strategy is not unique but it is symbolic of the way the financial elites benefit from their extraordinary influence over the biased tax regulations that favors the politically well connected.
The difficulty for leftist supporters of the Soros mind numbing collectivist culture is that they are unable to separate between the rhetoric and the reality of actual actions.
Soros is a pied piper for the naïve and misguided. All the millions he spends on altering the political landscape have a financial component to protect his own fortune.
Restructuring tax law and regulations never reforms the system. This one example, how hedge funds circumvent taxes, should illustrate that inserting loopholes into statutes is the function of lobbying and providing campaign contributions.
George Soros has a long record of avoiding paying taxes, while undermining political regimes. But he is not alone in avoiding taxes. Bankers Anonymous outlines how the game is played.
“If you set up a traditional hedge fund, first things first: you’ll want to charge the traditional “2/20.”Embedded in this short-hand lingo of “2/20” for hedge fund fees are two types of income.
With the two types of income, you need the two entities to keep the income tracked separately. Entity #1 collects the “2,” which is taxed like regular business income, and Entity #2 collects the “20,” which collects your totally awesome income at a lower tax rate.
The “2” refers to an annual management fee of 2% of assets under management. On a small/medium-sized hedge fund of, for example, $500 million under management, you will collect $10 million in management fees per year.”
Since the standard format for a hedge fund treats fees as different tax rates, the hidden deception is why such hedge funds go unregulated by the SEC? The sweet heart tax treatment deal that allows circumvention of normal rates is a profound offence. Moving the venture offshore just adds to the outrage. Targeting 2017 for final settle up will be forgotten as the next deferment exception is adopted.
Unless people admit the elite as the real power behind the political charade, there will never be equitable tax accountability. Soros plots to overthrow governments. Ignoring the tax bill should be a cake walk. A better solution is to institute serious and comprehensive oversight over the 2-20 tax dodge and apply the same rules to the financial privileged that ordinary citizens must observe. If you agree, keep the pressure on Soros and demand a long overdue resolution.
James Hall – May 13, 2015
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