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Report: Income losses let Manhattan DA candidate avoid taxes

June 17, 2021 GMT

NEW YORK (AP) — Manhattan district attorney candidate Tali Farhadian Weinstein and her husband, a hedge fund manager, paid no federal income taxes in four recent years because they reported negative income from investment losses or used deductions to reduce their bill, ProPublica reported Wednesday.

The couple said in response that they have followed the law and paid more than half of their income in federal, state and city taxes, totaling $124 million in tax payments on $246 million in earnings since they married in 2010.

Farhadian Weinstein is among eight Democrats running to replace Cyrus Vance Jr., who is retiring at the end of the year, with the winner likely to inherit his ongoing criminal investigation into former President Donald Trump. Primary voting started Saturday and ends next Tuesday.

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Farhadian Weinstein, a former federal prosecutor, told ProPublica she and Boaz Weinstein, the founder of Saba Capital Management, reported income in 6 of the last 11 years. In those years, she said, they paid more than half of their earnings in federal, state and New York City taxes.

In an interview, Farhadian Weinstein told The Associated Press that the issue would have no bearing on her handling of the Trump case, which has involved scrutiny of his tax records. In its article, part of a series on tax strategies of the wealthy, ProPublica said there was no indication the Weinsteins did anything illegal.

“ProPublica has an ideology that they’ve been trying to put out with this series of articles, and I think it’s interesting and worth discussing whether we should have a wealth tax rather than an income tax,” Farhadian Weinstein told the AP. “But right now we have an income tax system. And so in the years that you don’t earn income, you don’t pay taxes.”

ProPublica reported that Farhadian Weinstein and her husband listed negative income for two of the four years in which they paid no federal income taxes. In the other two years, the nonprofit news organization reported, she and her husband listed about $1 million in earnings but were able to trim their bill through deductions.

Boaz Weinstein took issue with ProPublica’s reporting and an assertion in the article that he and Farhadian Weinstein paid a federal income tax rate of 25.9% between 2010 and 2018.

“ProPublica’s analysis focuses on individuals who haven’t had to pay taxes because they haven’t sold their stock or their companies. That is not us,” Boaz Weinstein said. “Nearly all of our investment income is from Saba funds which elected to pay tax every year on all income at ordinary income rates.

“Because losses in Saba funds in certain years meant that we earned no income, ProPublica has made the simplistic error of averaging a year we paid 50% of our income with a year we had no income to make the claim that we paid on average 25%.”

“Our story said the Weinsteins paid on average 12.6% annually in federal income taxes over a period of nine years and they did, including three years in which they paid zero,” ProPublica president Richard Tofel told The Associated Press.

“During years they had taxable net income, as we said, their federal income tax averaged just under 26%. Mr. Weinstein is adding in state and local income taxes, which, as we said, are not the subject of our story, and not actually disputing the story’s accuracy,” Tofel said.

ProPublica’s report, based on troves of tax records the news organization obtained for some of America’s wealthiest people, led to criticism for Farhadian Weinstein from some of her rivals.

Former Manhattan prosecutor Lucy Lang said Farhadian Weinstein was ill-suited to take over the Trump investigation, saying “the most high-profile tax evasion investigation in the country’s history” can’t be entrusted to someone “who themselves has not paid federal taxes.”

Liz Crotty, another former prosecutor, tweeted: “Everyone should have to play by the same rules. That means paying your taxes too, not buying an election.”

Recent disclosures show Farhadian Weinstein has donated $8.2 million to her campaign, more than the combined amount the seven other candidates have raised. Lang has given $500,000 to her campaign.

Farhadian Weinstein said she’s spending heavily to ensure voters “understand their choices and understand what is at stake in this election,” and that they’re aware of her background, which includes a stint in the top leadership of the Brooklyn district attorney’s office, and her vision for reforming the Manhattan prosecutor’s office.

Farhadian Weinstein said her opponents are seizing on the tax story — and raising concerns about how she’d handle the Trump matter — because they want to slow her momentum.

“Once you clarify that we are, in a very straightforward way, paying 50-plus percent of our income in taxes, there’s no story left in terms of a connection to an open investigation, to tax evasion, or any matter related to the DA’s office,” she said.

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Follow Michael Sisak on Twitter at twitter.com/mikesisak