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."
Create an account with the same email registered to your subscription to unlock access.
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
-
Today's political cartoons - April 20, 2024
Cartoons Saturday's cartoons - papal ideas, high-powered debates, and more
By The Week US Published
-
5 sleeper hit cartoons about Trump's struggles to stay awake in court
Cartoons Artists take on courtroom tranquility, war on wokeness, and more
By The Week US Published
-
The true story of Feud: Capote vs. The Swans
In depth The writer's fall from grace with his high-flying socialite friends in 1960s Manhattan is captured in a new Disney+ series
By Adrienne Wyper, The Week UK Published
-
Empty-nest boomers aren't selling their big homes
Speed Read Most Americans 60 and older do not intend to move, according to a recent survey
By Peter Weber, The Week US Published
-
Brazil accuses Musk of 'disinformation campaign'
Speed Read A Brazilian Supreme Court judge has opened an inquiry into Elon Musk and X
By Rafi Schwartz, The Week US Published
-
Disney board fends off Peltz infiltration bid
Speed Read Disney CEO Bob Iger has defeated activist investor Nelson Peltz in a contentious proxy battle
By Rafi Schwartz, The Week US Published
-
Disney and DeSantis reach detente
Speed Read The Florida governor and Disney settle a yearslong litigation over control of the tourism district
By Peter Weber, The Week US Published
-
Visa and Mastercard agree to lower swipe fees
Speed Read The companies will cap the fees they charge businesses when customers use their credit cards
By Peter Weber, The Week US Published
-
Reddit IPO values social media site at $6.4 billion
Speed Read The company makes its public debut on the New York Stock Exchange
By Peter Weber, The Week US Published
-
Housing costs: the root of US economic malaise?
speed read Many voters are troubled by the housing affordability crisis
By Peter Weber, The Week US Published
-
Feds cap credit card late fees at $8
speed read The Consumer Financial Protection Bureau finalized a rule to save households an estimated $10 billion a year
By Peter Weber, The Week US Published