Why Boaz Weinstein Paid Little in Income Tax

The multimillionaire Boaz Weinstein disclosed why he paid no or little taxes for several years.


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Boaz Weinstein’s tax bills are making news.Credit…Richard Brian/Reuters

If rich people lose money, should they pay tax?

Last week, ProPublica published an article about the tax records of Boaz Weinstein, the multimillionaire hedge fund manager famous for betting against the JPMorgan Chase trader known as the “London Whale.” The article reported that Mr. Weinstein and his wife, Tali Farhadian Weinstein, who is running for Manhattan district attorney and may inherit an investigation into Donald Trump’s New York State taxes, paid no or very little federal tax in “four of six recent years” between 2010 and 2018.

It was the latest in a series of articles that ProPublica has produced based on a trove of private I.R.S. data detailing the taxes of America’s wealthiest individuals. The thesis of the package is that “it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share.” The article about the Weinsteins did not suggest that they did anything illegal, and it said that Ms. Farhadian Weinstein’s run for elected office made their tax history a matter of public interest.

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.

According to the tax returns, from 2010 to present, the Weinsteins paid $86.3 million in federal taxes and $37.7 million in New York State and city taxes, for a total 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 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.

Mr. Weinstein’s flagship fund was down 3.87 percent in 2012, 6.75 percent in 2013 and 10.81 percent in 2014. It eked out a 3.37 percent gain in 2015 and then a 22 percent increase in 2016. In 2017, his fund lost 8.9 percent, before posting an 11 percent gain in 2018. He lost 12.8 percent in 2019 and posted a whopping gain of 73 percent in 2020.

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.



The big money behind the contest for New York City mayor. Billionaires have spent $16 million on super PACs related to the race, the first mayoral election in the city to feature those 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. The primary campaigns end tomorrow.

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. But the deal faces opposition from some Vivendi investors, who are set to vote on the spinoff tomorrow.

Countries close in on a global tax overhaul. An international agreement to create a global minimum tax and impose additional levies on multinational companies could be reached by the end of the month, Politico reports.

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 a wave of flights. The airline scrapped hundreds of flights over the weekend, in large part over staff shortages. Its troubles highlight the challenges carriers face in trying to ramp up after pandemic lockdowns to capture a pickup in demand for travel.


What lumber’s tumble says about inflation

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. But lumber prices have since tumbled, as production surges and customers put off purchases, which some say is a good sign for the rest of the economy.

It’s a telling “dance of supply and demand,” writes The Times’s Matt Phillips, “that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.”


Beyond lumber, the conditions for accelerating inflation are apparent, but not inevitable. The Fed has pumped trillions of dollars into markets and kept interest rates low, while the federal government has run record deficits driven by spending to hasten 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. “We don’t have that kind of buying frenzy that creates sustained inflation,” she said.

The Big Quit

Surveys have warned for months that lots of workers were itching to quit their jobs. That “turnover tsunami” is now well underway: According to the Labor Department, nearly 4 million Americans left their jobs in April — the highest number on record. Economists say several factors are at play:

There’s a backlog of quitters. During the height of the pandemic, fewer people quit their jobs than would have otherwise. Now, with the economy recovering, many feel more comfortable leaving their jobs.

The economy reopened quickly. For many businesses, demand has risen faster than workers can be hired to meet it, contributing to an explosion of job openings. Workers who want to quit have plenty of opportunities.

Low pandemic spending left some workers with savings. That gives them more of a cushion to cover a stretch of unemployment.

Some workers have reassessed 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 expect the unusually high rate of quitting to 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.

For more on why so many workers are quitting, read Sydney Ember’s full article in The Times.


The tug of war over corporate transparency

Environmental, social and governance issues are increasing the tension between public companies, their shareholders and regulators. Companies have put pressure on the S.E.C. as the commission considers mandatory climate-change disclosures. But it’s activist shareholders, after a string of successful proxy fights, who have decided that the only way to preserve their gains on E.S.G. issues is to take the 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. But the I.C.C.R., which is suing the S.E.C., believes a change the commission made last year to a longstanding rule on shareholder proposals, which will go into effect soon, could make it much more difficult for shareholders to be heard.

At issue is how much stock a shareholder must own to introduce a resolution for a vote at the company’s annual meeting. Currently, in most cases it is $2,000 worth. The S.E.C. is looking to raise that to $25,000 if the shares are held for just one year. What’s more, groups of shareholders can no longer pool their ownership to satisfy the minimum.

The I.C.C.R. argues, according to its complaint, that the new rules will “severely impair shareholders’ access to the proposal process.” This process allows investors to air their concerns and engage in a “give and take” with management, Josh Zinner, the I.C.C.R.’s chief executive, told DealBook. Resolutions only go to a vote when companies won’t engage voluntarily, he said.

It was “a very political rulemaking,” Zinner said of the S.E.C.’s amendment process. The stricter requirements passed despite “overwhelming” shareholder objections, he said. Now, under a new chairman, Gary Gensler, there is change in the air — but the implementation of those new rules still looms. “We are encouraged by the direction the current S.E.C. 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).




The American buyout firm Clayton, Dubilier & Rice reportedly plans to pursue its $12 billion takeover bid for the British supermarket chain Wm Morrison, despite being publicly rejected. (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. (NYT)

Politics and policy

Meet Natasha Sarin, the 32-year-old Larry Summers protege who is helping lead the White House’s effort to crack down on tax evasion. (NYT)

Trump administration lawyers are having a hard time finding new jobs. (Bloomberg)


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 the rest

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

The owner of the North Face clothing brand quietly removed public criticism of forced labor in China’s Xinjiang region — and then, even more quietly, reinstated it. (WSJ)

The $400 million media rights fight that could sink French pro soccer. (NYT)


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