Robert Mercer, James Simons, other Renaissance hedge fund executives agree to $7 billion tax payment
A group of current and former executives at pioneering hedge fund Renaissance Technologies have agreed to pay up to $7 billion in back taxes, interest, and penalties, the company told investors Thursday. The settlement ends a long dispute with the Internal Revenue Service over how some Renaissance funds booked short-term gains for tax purposes. It is one of the biggest tax settlement in U.S. history, if not the largest, The Wall Street Journal reports.
Among those paying the IRS are Renaissance founder James Simons, a mathematician and former code-breaker who used algorithms to find and exploit lucrative short-term patterns in financial markets, and former co-CEO Robert Mercer. Simons will make an additional "settlement payment" of $670 million on top of his back taxes. The settlement covers tax payments from the firm's hugely successful Medallion fund between 2005 and 2015, when the IRS changed its reporting rules. Because Medallion only invests the money of employees, their families, and select friends, outside investors aren't involved in the settlement, the Journal says.
Mercer and Simons are both political mega-donors, but with vastly different political leanings. Simons, 83, was one of Hillary Clinton's largest donors in 2016, supported President Biden in 2020, and gave millions to help Democrats win control of Congress. Mercer, 75, was Donald Trump's largest financial backer in 2016, has close ties with Stephen Bannon, and invested millions in Breitbart News and Cambridge Analytica, the consulting firm embroiled in scandal for harvesting Facebook data to aid Trump's campaign.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The type of tax scheme used by Renaissance caught the attention of Congress, which helped push the IRS to change how hedge funds pay taxes on short-term gains. Sen. Carl Levin (D-Mich.), who died over the summer, led a 2014 hearing focused on Renaissance's tax strategy. "I wish Sen. Levin were here, seven years after he first exposed its outrageous tax scam, to see RenTec finally held accountable," said Elise Bean, a former aide to the senator. "It's good to see that, despite a yearslong, knock-down, bare-knuckles battle, the IRS prevailed in compelling at least one set of billionaires to pay the taxes they owe."
The settlement shows what the IRS could do with more enforcement staff and funding, Steve Rosenthal at the Tax Policy Center tells the Journal. "The IRS is so resource-constrained that they often can't pursue difficult matters. But here they hung tight and they were vindicated."
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
4 ways to give back this holiday season
The Explainer If your budget is feeling squeezed, remember that money is not the only way you can be generous around the holidays
By Becca Stanek, The Week US Published
-
4 tips for hosting an ecofriendly Thanksgiving
The Week Recommends Coming together for the holidays typically produces a ton of waste, but with proper preparation, you can have an environmentally friendly gathering.
By Theara Coleman, The Week US Published
-
Jussie Smollet conviction overturned on appeal
Speed Read The Illinois Supreme Court overturned the actor's conviction on charges of staging a racist and homophobic attack against himself in 2019
By Peter Weber, The Week US Published
-
Has the Taliban banned women from speaking?
Today's Big Question 'Rambling' message about 'bizarre' restriction joins series of recent decrees that amount to silencing of Afghanistan's women
By Harriet Marsden, The Week UK Published
-
Cuba's energy crisis
The Explainer Already beset by a host of issues, the island nation is struggling with nationwide blackouts
By Rebekah Evans, The Week UK Published
-
Putin's fixation with shamans
Under the Radar Secretive Russian leader, said to be fascinated with occult and pagan rituals, allegedly asked for blessing over nuclear weapons
By Harriet Marsden, The Week UK Published
-
Chimpanzees are dying of human diseases
Under the radar Great apes are vulnerable to human pathogens thanks to genetic similarity, increased contact and no immunity
By Harriet Marsden, The Week UK Published
-
Deaths of Jesse Baird and Luke Davies hang over Sydney's Mardi Gras
The Explainer Police officer, the former partner of TV presenter victim, charged with two counts of murder after turning himself in
By Austin Chen, The Week UK Published
-
Quiz of The Week: 24 February - 1 March
Puzzles and Quizzes Have you been paying attention to The Week's news?
By Sorcha Bradley, The Week UK Published
-
Will mounting discontent affect Iran election?
Today's Big Question Low turnout is expected in poll seen as crucial test for Tehran's leadership
By Sorcha Bradley, The Week UK Published
-
Sweden clears final NATO hurdle with Hungary vote
Speed Read Hungary's parliament overwhelmingly approved Sweden's accession to NATO
By Peter Weber, The Week US Published