Greedy Greenwich Billionaire Edward Lampert may have found a way to shield himself from millions of dollars in taxes under legislation that would raise levies on profits at private- equity firms.
ESL Partners LP, the Greenwich, Connecticut, hedge fund Lampert started more than 20 years ago, and affiliates distributed about $829 million of stock in Sears Holdings Corp., AutoNation Inc. and AutoZone Inc. to him on June 2, according to regulatory filings. The fund is scheduled to transfer more shares in the retailers to Lampert by the end of July.
By taking direct ownership of the shares, Lampert would be taxed at the capital-gains rate of 15 percent when the stock is sold, rather than the ordinary income rate of 39.6 percent that his fund would have to pay under the bill,
Lampert is ranked 316th on the Forbes list of world’s richest people, with an estimated net worth of $3 billion.
The legislation is aimed at reducing a tax break for buyout firms.
Greedy Greenwich Billionaire Edward Lampert Doesn't Want To Talk About Paying A Lower Tavx Rate Than Honest Hard Working Americans
Steven Lipin, a spokesman for ESL, declined to comment, and Lampert didn’t return telephone calls and e-mails sent to his office.
Dirty Deeds Done Dirt Cheap
According to last week’s filings with the U.S. Securities and Exchange Commission, Lampert signed an agreement that he can only sell “or otherwise dispose of” the Sears, AutoZone and AutoNation shares he received through the distribution on the same terms and at the same time as ESL Partners.
In January, Lampert disclosed that he had placed Sears, AutoZone and AutoNation shares with a combined market value of $10.3 million in a grantor retained annuity trust, a vehicle that allows people to give large sums to family members under the Internal Revenue Code without paying a gift tax.
In last week’s SEC filings, Lampert described the transfers as “internal restructuring transactions” that will provide him with “direct ownership” of shares he previously held indirectly through the hedge fund. The distribution simultaneously reduces his ownership in the hedge fund.
In January, Lampert’s hedge fund made a similar distribution to him on a smaller scale. In 2004, affiliates of ESL Partners transferred some of their holdings to the hedge fund, while Lampert didn’t personally receive any shares, regulatory filings show.
Eddie Doesn't Want To Pay For The Stinking Bailout Or The Two Senseless Wars That Are Bankrupting America.
The legislation approved by the House on May 28 would raise taxes on carried interest, or the share of profit paid to managers who run private-equity, venture-capital and real-estate funds. The House had voted three times in three years to raise the levy, only to see the measure stall in the Senate.
The Senate may vote this week on the bill, which backers say would help avoid higher federal budget deficits. The Congressional Joint Committee on Taxation estimates that the private-equity provision, known as Section 710, would raise about $17.7 billion in revenue over 10 years.
According to last week’s SEC filings, ESL Partners distributed 3.79 million Sears shares with a market value of about $299 million to RBS Partners on June 2, which in turn sent 3.72 million of the shares to Lampert and 77,470 to his partner, William Crowley. The partnership and its affiliates distributed about 2.79 million AutoZone shares with a value of almost $520 million and 1.16 million AutoNation shares valued at about $23 million to the two money managers through entities such as RBS Partners, based on June 7 closing prices.
Lampert received stock with a combined market value of about $828.9 million, according to the documents. ESL Partners plans to make a second distribution to Lampert and Crowley after obtaining clearance under federal antitrust rules.
Under current tax rules, distributions of marketable securities by an investment fund such as ESL Partners to its general partner will not generate a tax bill.
Eddie Lampert actually gets the best of both worlds: He can maintain 15% the capital-gains treatment and he can also control the timing of when he pays that capital gain.
When are we going to start treating working men and women as well as we treat billionaire stock traders.
If Greedy Greenwich Billionaire Fat Cats Like Eddie Lampert Started Paying Their Fair Share We Would Have Enough Money For Education And Property Tax Relief.
It's obviously rational for Mr. Lampert to try avoid taxation when possible, and this is why governments need to take heed when designing tax systems.
Individuals will do what they can to avoid paying, either by reducing the taxed behaviour or acting to take advantage of loopholes. And the rich will be best able to do this.
Let's be honest for a moment, Greedy Eddie Lampert Lampert is worth $3 billion. If he earns just 1% per year on that fortune—and he certainly earns much more—then he takes home $30 million in income. Per year. That's 600 times the median household income in America
It's more money than a person can reasonably spend.
Yet, Mr Lampert feels he needs to take special steps to avoid paying the regular income tax rate for individuals in the highest tax bracket
If you approached Eddie Lampert and told him he didn't work for his money, he'd bristle at the mere suggestion. And yet he wants to continue to take advantage of the silly rule by which the money hedge fund managers can pay a tax rate of just 15%
Greedy Eddie Lampert can afford to be a grown-up and pay the same taxes as everyone else.
The fact that this kind of behaviour is lauded in Greenwich when it ought to be scorned is a real problem.
It's also an indicator that something remains broken in Greenwich's attitude toward wealth.
The Town can't afford to build the high school kids a new auditorium as a Greedy backcountry billionaire makes moves to enjoy a 15% tax rate.
How Can Eddie Lampert Hoard Billions And Billions And Billions Of When There Are So Many Starving Children In The World?
"Any man who has $10,000 left when he dies is a failure."
Errol Flynn
"Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."
Jesus Christ (Matthew 19:24) NIV
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Finley Peter Dunne
Finley Peter Dunne
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