15:59 GMT24 February 2020
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    George Soros, long an advocate of imposing more taxes on the wealthy, has himself amassed a massive fortune by delaying those very tax payments - but the bill may be about to come due.

    A large portion of money amassed by the former hedge manager came from delaying taxes he would have paid on fees from his clients because US law allowed him to reinvest them into his fund, only paying taxes when they were ultimately withdrawn.

    Soros accumulated $13.3 billion (a significant portion of his total $30 billion fortune) by this kind of tax delay by the end of 2013, Bloomberg News reports, citing Irish regulatory filings. But the loophole that allowed the reinvestment without taxation was closed in 2008. Before that, Soros moved his assets to Ireland — which some saw as a potential dodge of the US law at the time. 

    Fund managers were given until 2017 to pay off whatever had accumulated, and by one calculation (using just the information publicly available) Soros could owe $6.7 billion in the taxes he's been putting off year after year. 

    The tax deferral strategy makes enormous sums of money for fund managers. Bloomberg gives one stark example. 

    A finance professor at the University of Illinois at Urbana-Champaign, Vyacheslav Fos,  gave Bloomberg one stark hypothetical comparison. 

    A manager starting out with $12 million and doing more or less what Soros did for 40 years, would end up with $15.9 billion. The same manager, who instead paid federal, state, and local taxes on his fees and gains would have only $2.4 billion by the end of the same time period. 

    Some see this as a clear hypocrisy for someone to advocate raising taxes while they simply find a way around them. 

    In a 2012 interview with Fareed Zakaria of CNN he was asked whether he supported raising taxes on the very wealthy. 

    "Yes, I very much do so," Soros said, "because it’s the big boom, the super-bubble that resulted in a great increase in inequality."

    "Not only do we have the after effect where we have slow growth one way or the other, but if you have better distribution of income, the average American will be better off," Soros added.

    But James Sitrick, Soros' long-time tax attorney (who also worked on tax policy for the US Treasury) says Soros is playing fair and by the rules. 

    "No person has a constitutional obligation to pay any more taxes than he is required to pay,” said Sitrick. If Soros "couldn't legally do it, he wouldn't do it."

    Soros, originally from Hungary, started his financial career in the 1950s in New York City and famously made about $1 billion by betting on the devaluation of the British pound sterling.

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    Tags:
    tax loophole, investments, finance, investors, wealth, taxes, George Soros
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