Senators Blast Dem Mega-Donor Over IRS Investigation into Tax Avoidance Scheme
Senators Blast Dem Mega-Donor Over IRS Investigation into Tax Avoidance Scheme
Top super PAC donor paid ‘an unjustified lower tax rate,’ says Dem investigator
http://s4.freebeacon.com/up/2014/07/simons.jpgHedge fund manager Jim Simons / AP
BY: Lachlan Markay
July 23, 2014 2:55 pm
A major Democratic donor who is funding some of the left’s most politically active electioneering groups was subject to bipartisan condemnation this week in the midst of a federal investigation into his hedge fund’s tax avoidance schemes.
Senators from both parties blasted efforts by Renaissance Technologies, a hedge fund owned by Democratic mega-donor Jim Simons, to shield itself from federal income taxes during aTuesday hearing.
“Two banks and a handful of hedge funds developed a complex financial structure to engage in highly profitable trades while claiming an unjustified lower tax rate and avoiding limits on trading with borrowed money,” said Sen. Carl Levin (D., Mich.) in his prepared remarks.
Levin chairs the U.S. Senate Permanent Subcommittee on Investigations, which is investigating the use of transactions known as “barrier options” to subject profits from complex financial instruments to capital gains tax rates, instead of much higher rates on standard financial trades.
Two hedge funds, including Renaissance, and a pair of major European banks are now the subjects of an investigation by the IRS over the scheme.
“Renaissance Technologies was able to avoid paying more than $6 billion in taxes by disguising its day-to-day stock trades as long term investments,” said Sen. John McCain (R., Ariz.), the committee’s ranking Republican, in his opening statement.
“One thing is clear: Americans are tired of seeing Wall Street firms playing by a set of rules other than those that apply to ordinary citizens,” McCain said.
Simons is anything but an ordinary citizen. A former National Security Agency code breaker, and later the chairman of Stony Brook University’s mathematics department, Simons used his extensive knowledge of computer modeling to build one of the most successful hedge funds in the world.
His estimated net worth is more than $15 billion.
Simons has used that fortune of late to help elect Democratic politicians. His largest contributions during the 2014 election cycle have gone to two of the Democrats’ largest independent expenditure groups.
On a single day in March, Simons gave $2 million to Senate Majority PAC, $1 million to House Majority PAC, and $12,000 to the Democratic Senatorial Campaign Committee.
Simons has donated nearly $13 million to Democratic candidates, committees, and interest groups just since 2008, according to campaign finance data compiled by CQ Roll Call.
The top recipient of Simons’ cash over the past few cycles was Priorities USA Action, a Democratic super PAC that worked to reelect President Obama. Simons gave the group $5 million in 2012.
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