Do employees at Hedge Funds benefit from any tax-relief programmes?
A horrifying thought came into my mind where a top PM crushes it in a year where his bonus means that his pay is 10M for the year. Then comes along the government to take 45% (e.g. London) away. Any thoughts on insights appreciated.
Thanks
It really isn’t horrifying (you can argue about whether taxes are at the appropriate level, etc) but you are still pulling down a ton of money. If that scares you, you are in for a spooked out life.
There isn’t really any tax relief on standard compensation. The ways you can benefit is:
1) roll bonus into fund (essentially turn into shares of the fund) - defer your taxes and get a return on the full amount
2) be a partner - get taxed as carried interest (return on investment instead of standard compensation). This is usually what causes all the tense conversations about where this is “right”.
Thank you for this. Very clear.
I think it is horrifying that you essentially deal with stresses of any job that pays over 150k and the government takes half of the money that you’ve worked hard for - but that’s a different topic entirely.
There are definitely tax benefits of going out and starting a fund on your own, for example on expenses you’d be able to claim some of it back (I.e travel) that you otherwise wouldn’t have the option of doing as an employee - I guess that’s why you see many go out and try it alone. But this approach also has its own difficulties.
Gotta pay for all the parasites that are sustained off of the contributing member's of societies money via social programs somehow.
jesus christ..
besides fuck around on a computer all day what do you do exactly to deserve your comp? bunch of sissy boys acting like the world owes them money because they fiddle with numbers all day, fuck off and get some perspective.
gross
If you don't work (as in choose, not people who aren't physically able), you don't deserve to eat. End of story. And if you want to bring up the fact that people are being prevented from working because StAyInG hOmE sAvEs LiVeS, you can thank the government for that brilliant policy decision. Go back to turning comments, maybe someday you'll provide enough tangible value to actually have an opinion that matters.
Your comments are pretty appalling and you are using a common tactic of confusion and deception to try and validate your point.
In response to a comment on taxes you generalized that “you must pay for parasites somehow”, knowing that 1) that is going to trigger people and 2) that the vast majority of your taxes do not go to social welfare programs and 3) knowing that the majority of people seeking help through welfare programs are not those “gaming” the system, but rather those that need help. So you took a comment about a large amount of taxes and then focused on a tiny portion of those taxes.
Then when called out, you turn to that single population that you know many will agree with and say they are the problem, when in fact that is a fraction of a fraction of where you tax money goes.
And finally you had to go and insult the other poster (who I agree didn’t respond in the kindest way to your comment) because that somehow solidifies your argument.
It is pretty clear that cutting all social welfare programs wouldn’t make a huge dent on taxes but would have a huge quality of life impact on many people (and this is assuming that everyone was “taking advantage” of the system). There are definitely discussions to be had about how to make those more efficient (and the overall government more efficient) but you aren’t calling that out as an issue.
You can argue about the lockdown, which you try to do, but like you note that is a government policy not something an individual can opt in or out of (if the restaurant you work at is closed, guess what? You are out of a job and this economy isn’t exactly ripping for those in the service industry).
These roundabout arguments rooted in some dislike of certain programs or people never go well. Much better to actually talk through how it would work (is efficiency the issue? Is it the govt? Should more be private? would you lower taxes? By how much? What would you cut? Why not the defense budget? Etc). But I know that’s not what this board is for.
Of all the people in the highest tax bracket, hedge fund managers are about the lowest on my “deserving sympathy” ranking
move to Puerto Rico....zero federal taxes and only like 1-2% local taxes...living the dream....i know a few hedge fund guys who have done this and are making BANK
Ya but ur living in Puerto Rico ...
for some people, this is a positive. also, you can do this for just 2 years. ask your firm to defer your bonus...do that for a couple years until it is a sizable number...move to PR...live there for a year...then get paid your deferred comp...then move back to the mainland (if you want) and you have just legally avoided paying income tax.
Finance guys moving to PR is really picking up steam. Three of my friends are moving later this year. Two from NY and one from CA. All are set to make $5-15mm in perf fees on an IPO later this year.
I'm curious about the logistics of this, where are they going to live? What is the nightlife/social scene like? I would imagine the higher end areas are pretty safe?
It really does suck because an employee does not have much room to structure the way their comp arrives or where it goes...
You’re more than welcome to take a lower paying job and not worry about the taxes.
Obviously no one loves paying them (especially those of us with relatively high W2 earnings), and of course I wish the government were more efficient (I also wish most of the companies I deal with were too... private sector efficiency my ass), but I think the government has a valid role to play in society, and an extra $1 in my pocket is still an extra $1 even if the pre-tax number I had in my head was higher.
I think about it like winning the lottery - sure, the number on the billboard is $500M and you only end up with like $200M, but that’s a feature you know ahead of time. I’d still rather have the $200M, and I’d still rather work a high-paying job even if I have to give the tax man his due
The odds that you or someone you know will benefit from the social programs paid for by taxes is far, far higher than the odds of you, a second year ER ASO, becoming a $10mm/annum HF PM paying $5mm in taxes. Why don't you worry about your current job and pumping out sell-side reports no one reads instead of worrying about a fake hypothetical that will almost certainly not happen?
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