Senator Wyden Seeking to Close Hedge Fund Tax Loophole

June 30, 2015 Debbie Jacobs Hedge Fund News

Official portrait of United States Senator Ron Wyden.

Official portrait of United States Senator Ron Wyden.

Former chairman of the Senate Finance Committee Ron Wyden introduced a proposal to put an end to Hedge Fund tax evasion through what he says is the illegitimate use of a loophole in the tax code. Apparently some hedge funds have been able to avoid paying taxes on their profits for several years utilizing a loophole exempting reinsurance firms from paying taxes. The Democratic Senator from Oregon claims that hedge funds have cost the US government millions, if not billions of dollars in uncollected taxes by placing their earnings in offshore re-insurers that they themselves set up for this purpose.

Hedge fund giants such as David Einhorn and Dan Loeb, to name only two of many, route their investments through reinsurers in locations like Bermuda in order to minimize, or indefinitely delay tax payments. The fund managers say that these are perfectly legitimate businesses that really do take on risks from primary insurers, and are not tax scams.

“For over 10 years now this loophole has allowed some hedge fund investors to avoid paying hundreds of millions of tax dollars,” Wyden said in a statement last Thursday. “It’s time we shut it down for good.”

David Einhorn, re-insurers, Ron Wyden, tax loopholes,

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