The Lever: J.D. Vance’s Wall Street Tax Dodge
August 19, 2022
Columbus, OH – A new report from The Lever finds that multimillionaire J.D. Vance, who said it is “objectively true” he is a member of the elite, appears to have “structured his income to exploit” an elite tax loophole benefiting the wealthy few. Vance is a Big Tech-backed Silicon Valley millionaire who owns a D.C. townhouse, enjoys tasty brunches and wine tastings in San Francisco, and titled his own blog “The Hillbilly Elite.”
“J.D. Vance is a multimillionaire fraud who is running for U.S. Senate to pad his pockets and those of his fellow coastal elites. Ohioans can’t trust a phony like Vance, who has shown he’s only out for himself,” said Michael Beyer, a spokesperson for the Ohio Democratic Party.
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The Lever: J.D. Vance’s Wall Street Tax Dodge
Julia Rock
August 19, 2022
- The supposed populist Ohio Republican Senate candidate J.D. Vance has structured his income to exploit a controversial tax loophole that almost exclusively benefits the super-rich, according to financial disclosures reviewed by The Lever.
- Vance’s opponent, Ohio Democratic Rep. Tim Ryan, has co-sponsored legislation to close the so-called carried interest loophole, which lets many Wall Street moguls pay an artificially low tax rate on their income.
- Politicians in both parties have denounced the tax dodge — but if they ever get serious about trying to eliminate the maneuver, Vance could stand in their way. If Vance wins in November, the Senate’s arcane rules could empower him to stall any initiative to close a tax loophole from which he stands to personally benefit.
- Only an elite few are eligible for the notorious carried interest loophole, which allows private equity and hedge fund moguls to pay a capital gains rate of 20 percent on some of their income, rather than the typical 37 percent tax rate for top earners. In contrast with regular investors, only general partners — the firms’ top executives, who have become some of the richest people in the country — benefit from the loophole.
- Vance, according to a newly filed personal financial disclosure, seems to count himself among this elite few, having structured his compensation to take advantage of the tax dodge. Indeed, his disclosure explicitly shows him classifying his ownership stakes in investment funds as carried interest.
- Such financial maneuvers contrast with Vance casting his campaign as a populist crusade against elites. Having risen to fame thanks to his 2016 memoir Hillbilly Elegy, Vance has positioned himself as a “conservative outsider” — despite the fact that he is being backed by his former boss, billionaire venture capitalist Peter Thiel, as well as former President Donald Trump.
- Vance’s campaign is being boosted by a GOP super PAC whose largest donors include moguls from the equity industry that benefits from the carried interest loophole. Among them is Blackstone CEO Stephen Schwarzman, who gave the super PAC $10 million as his firm has been lobbying on “issues related to carried interest.”
- The past three presidents — Joe Biden, Trump, and Barack Obama — all campaigned on closing the carried interest loophole, as have lawmakers in both parties. Vance, who has not taken a stance on the tax break from which he is positioned to benefit, did not respond to a request for comment.
- Earlier this year, when asked by Huffington Post what he would do with his assets if elected, Vance replied, “I think probably put it in a blind trust is the thing that would make the most sense.”
- In this case, though, he wouldn’t be blind to his stake in preserving the carried interest loophole.
- Vance has not named many policy specifics on the campaign trail, but has alluded to imposing higher taxes on corporations that offshore jobs or engage in certain types of politics.
- He has not, however, specifically taken aim at the carried interest loophole.
- Vance reported on his disclosure forms that he is a general partner at two different private equity funds, and says he has carried interest stakes there.
- One of the firms where Vance lists himself as a general partner is “Rise of the Rest Seed Fund.”
- In 2017, Vance launched that venture capital fund with AOL co-founder Steve Case to back startups outside of New York, California, and Massachusetts. Big names invested in that fund including Jeff Bezos, the Kochs, the Waltons, and billionaire hedge fund manager Ray Dalio.
- His disclosure lists Vance as a “general partner of Rise of the Rest Seed Fund, LP,” adding in a comment: “Filer is entitled to carried interest from the general partner of Rise of the Rest Seed Fund, LP.”
- Vance also runs a private equity firm, Narya, which he started in 2019 to provide venture capital to Ohio companies. The firm raised money from prominent investors including Thiel, as well as billionaire venture capitalist Marc Andreessen and former Google CEO Eric Schmidt.
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