The man who made billions shorting your house is now thinking of saving millions by shorting America itself, of tax dollars.
John Paulson, manager of the $19 billion hedge fund Paulson & Co., has been doing some house shopping of his own in sunny Puerto Rico, Bloomberg News reports. After all, the weather there is lovely, particularly when the government forces you to pay no taxes on your hedge-fund winnings.
Since last year, Puerto Rico has been letting new residents pay no local or U.S. federal taxes on capital gains, Bloomberg notes. In contrast, New York, where Paulson has lived all his life and has not one but two ginormous residences, can impose a 50 percent marginal tax rate on the wealthy, according to Bloomberg.
I'm no genius hedge-fund manager, but that seems like an easy decision, if all you care about is hanging onto your money and maybe walking down to a gorgeous beach from your gorgeous condo every day. Ten other wealthy people have already made the jump, Puerto Rico's Secretary of Economic Development and Commerce tells Bloomberg.
Paulson & Co. declined to comment to Bloomberg about the report.
Then again, Paulson did recently humble-brag about his loyalty to New York, so the timing is perhaps a little awkward. After Occupy Wall Street protesters occupied Paulson's front stoop in 2011, he wagged his finger at their ingratitude, saying one-percenters like him paid 40 percent of the taxes in New York and that we should maybe just be glad he has so far not decided to take his money to a warmer locale, maybe one that doesn't smell like a port-a-john in the summer.
Now, like Gerard Depardieu and other put-upon wealthy facing higher taxes here and in Europe, Paulson might finally have had enough. Paulson tried to warn us!
One thing Paulson didn't try to warn us about: The housing crisis, on which he made $15 billion betting heavily and successfully on the collapse of the subprime mortgage market. It may have been The Greatest Trade Ever, as Wall Street Journal reporter Gregory Zuckerman dubbed it, leading to immortality in the annals of financial history, including in Michael Lewis's "The Big Short."
Paulson can't be blamed for seeing an opportunity and cashing in on it. Though as Hugo Lindgren pointed out when reviewing Lewis's book in 2010, it would have perhaps been nice if Paulson and other hedge-fund managers feasting on subprime might have given the rest of us a heads-up.
Paulson hasn't been as lucky with his recent bets, on a rise in gold and a breakup of the euro zone. Since 2010, the size of Paulson & Co's assets under management has been slashed in half, to $19 billion from $38 billion. But don't fret: Paulson is still worth more than $11 billion, by Bloomberg's measure.
And he is busy finding ways to shield whatever cash comes in from taxes. Last year he and other top executives at his fund routed $450 million in profits through a Bermuda company so they could delay paying taxes on it indefinitely, Bloomberg reported recently.