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Paulson says he's staying put, not moving to Puerto Rico
BOSTON, March 15 |
BOSTON, March 15 (Reuters) - Hedge fund titan John Paulson, who oversees $18 billion in assets from his offices in New York, said on Friday he has no plans to leave the island of Manhattan for the island of Puerto Rico.
In an unusual move, Paulson, a life-long New Yorker who guards his personal life zealously, had his firm, Paulson & Co, put out a news release to rebut speculation that he might pick up his family and move to the Caribbean.
"He has no plans to move to Puerto Rico," his spokesman said in a statement. "While Mr. Paulson has considered real estate investments and has vacationed on the Island, he has no plans to establish a permanent residence there."
Bloomberg News reported earlier this week that Paulson, 57, whose estimated net worth is put at $11.2 billion by Forbes, was mulling a move to take advantage of a new law that would eliminate taxes on gains on the money he has invested with his hedge funds. He currently lives and works in Manhattan.
Seeking more favorable tax treatment is not new in the hedge fund industry. Edward Lampert moved his $10.5 billion ESL Investments to Florida from Connecticut last year for tax reasons.
Interest in Paulson's moves has been strong ever since his contrarian bet against the housing market earned him billions in 2007. In the last two years, however, some of his funds have made headlines with heavy losses as Paulson was too optimistic on an economic recovery and has stuck with gold and gold miners even as the metal's price has fallen. Most of Paulson & Co's staff is employed in New York.
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Whether you think it fair or not, a natural outcome of a “progressive” (i.e. accelerated) tax system is that the top 1% of tax payers contribute over a third of all tax revenues collected. This means that there is a tremendous overdependence on a small number of people for a HUGE portion of tax revenues. Therefore it is worth looking more closely at this group of “Golden Geese”.
Contrary to Occupy Wall Street rhetoric, this group is hardly homogeneous. Remember that both Michael Moore and the head of Goldman Sachs are not only in the top 1% but most certainly part of the top 0.1%. They are certainly not alike in political outlook, attitude towards taxation or methods of accumulating wealth. About the only real common factor is that as a result of globalization, the Golden Geese are no longer bound to the tax home of their birth to make and maintain their wealth. In business terms, the Golden Geese are not “sticky”.
Combine overdependence with lack of stickiness and you have a recipe for financial disaster. To put this in better perspective, it is worth noting that the top 400 taxpayers in the US in 2008 (the last year I have done the calculations) contributed 1.9% of ALL OF THE US TAX REVENUE COLLECTED. In 2007, it was 2.05%. Assuming that with increased concentrations of wealth that this number is stable (probably increasing), this means that if even 1/4 of these taxpayers (Note: Paulson is certainly one of them) leave the US tax system, this will have a drop of 0.5% in all future US tax revenues. This would make the sequester cuts look like a rounding error.
Is this group leaving? Unfortunately the measuring methods are retrospective and so you don’t know they are gone, until long after their departure. However, given that Paulson was supposed to be the 11th (not the first) US taxpayer to move to PR AND that US expatriations (where the taxpayer leaves the US system completely) have been increasing dramatically and expodentially in the last few years, one would be foolish to ignore this trend.
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