A massive trove of tax information obtained by ProPublica, covering thousands of America’s wealthiest individuals, reveals what’s inside the billionaires’ bag of tricks for minimizing their personal tax bills — sometimes to nothing.
The leading candidate to take over the investigation relating to former President Donald Trump’s taxes paid virtually no federal income taxes in four of six recent years.
Tali Farhadian Weinstein, who is married to hedge fund manager Boaz Weinstein, is running for Manhattan district attorney in the Democratic primary, in which early voting has already begun. She and her husband reported income as high as $107 million in 2011, and she recently donated $8.2 million to her campaign — more than her seven Democratic rivals have raised in total.
But in 2017, according to a trove of tax data obtained by ProPublica, she and her husband paid no federal income tax. In 2015 and 2013, they also paid no federal income tax. In 2014, she and her husband paid $6,584.
Farhadian Weinstein provided a statement in response to questions from ProPublica: “In 6 of the last 11 years (the years in which we had income), we paid more than 50% of our income in Federal, State and New York City taxes. In the other years, we earned no net income and, as a result, did not pay income tax. We both benefited from many opportunities in this city and country and are glad to pay taxes at among the very highest tax rates in the entire country.” (The IRS records obtained by ProPublica show that from 2010 to 2018, the couple paid 25.9% overall in federal income tax on the money they made during the seven years when they had positive adjusted gross income, which the IRS defines as earnings minus certain items like alimony. On average, the couple paid 12.6% annually from 2010 to 2018. During that time, the top federal marginal tax rate fluctuated between 35% and 39.6%. These figures don’t count state and local taxes, which typically are significantly less than federal taxes.)
In two of the years in which the Weinsteins paid no federal income taxes, they reported negative income, losses that appear to be driven by the volatile performance of Boaz Weinstein’s hedge fund. They also claimed and received a refundable tax credit — a total of $5,000 over those two years — designed to help middle- and lower-income families with the costs of raising children.
In the other two years in which they paid little or no federal income taxes, they reported adjusted gross income of about a million dollars each year. They were able to reduce their income tax bill in those years by using a variety of deductions.
There’s no indication the Weinsteins did anything illegal.
The Weinsteins are among thousands of wealthy people whose tax return data ProPublica has obtained. Last week, ProPublica published its first article using the IRS data, which revealed that the 25 richest Americans paid little or no federal income taxes compared to their immense gains in wealth in recent years. This story was not on our initial list of coverage of the IRS data but a ProPublica reporter came across Farhadian Weinstein’s information as part of his ongoing research. With the primary election a week away and the outsized spending by Farhadian Weinstein continuing to draw attention, ProPublica concluded the public interest would be served by letting voters and other taxpayers see her tax history.
She is vying to lead one of the most prestigious prosecutorial offices in the country. If Farhadian Weinstein wins the Democratic primary, she is virtually guaranteed to win the general election later in the year since Democrats dominate the borough. She would take over the office at a pivotal time: Violent crime in New York City is rising, and the office is widely reported to be in the advanced stages of an investigation into the taxes and finances surrounding Trump and his company.
Farhadian Weinstein has made fairness a central principle of her campaign. As she has put it on her campaign website, “Tali believes in a DA’s office that is ethical, fair, and advances equity for all New Yorkers.” She has presented herself as a centrist in a progressive Democratic field. A former federal prosecutor and general counsel for the Brooklyn DA’s office, she has picked up a string of high-profile endorsements, including from former Attorney General Eric Holder, former Democratic presidential nominee Hillary Clinton, the New York Daily News and the New York Post.
Farhadian Weinstein has received hundreds of thousands in donations from wealthy financiers, including contributions from Citadel’s Ken Griffin, PointState Capital’s Zach Schreiber and Pershing Square founder William Ackman. That has prompted criticism that she will be soft on white-collar crime as the DA in the nation’s financial capital. She has said those donations will not influence her.
Farhadian Weinstein has raised $12.8 million in all (including the $8.2 million she contributed herself), towering over the next closest competitors, Alvin Bragg at $2.3 million and Lucy Lang at $1.6 million.
Boaz Weinstein founded Saba Capital Management. The firm reportedly once managed more than $5 billion, but it has performed unevenly in the past decade.
In two of the years that the Weinsteins paid zero federal income tax, 2017 and 2015, their returns show millions in business losses. In those years, the couple reported a net negative income.
But they avoided virtually all federal income taxes even in two of the years in which they made money. In 2014, their adjusted gross income was almost a million dollars. That year, the couple’s deduction for investment interest expense skyrocketed to just under a million dollars, essentially wiping out their taxable income for the year. The tax code allows investors to take a deduction for interest paid on money they borrow to invest. That effectively allows their risk-taking to be subsidized by other taxpayers.
In 2013, the couple reported $1.5 million in adjusted gross income and still paid no federal income tax. That year, the couple reported a deduction of more than $1 million for “miscellaneous expenses” — a catchall deduction, since eliminated, that can include expenses for tax and investment advice and some legal expenses. (The tax records obtained by ProPublica did not enumerate the specifics of those expenses, and Farhadian Weinstein declined to answer questions about them.)
If Farhadian Weinstein ultimately is elected, the status of her most high-profile potential case — the Trump investigation — is unclear. There have been no charges filed, and there may never be. According to The New York Times, investigators have focused on potential financial crimes such as tax and bank fraud, including whether one or more employees of the Trump Organization received certain benefits from the company without paying taxes on them and whether the company possibly lowered the value of properties to pay less in taxes and inflated their value to secure loans. Trump and his company have denied wrongdoing.