WASHINGTON — ADW Capital Partners appears to be the kind of hedge fund Democrats on the Senate Finance Committee would like to tax more heavily: small but fast-growing, with $330 million in assets, a New York address, a Delaware incorporation but doing business in Florida, and an offshore feeder company that forecloses some of its customers from US taxes.
No wonder, then, that the owner, Adam Wyden, has come out as a vociferous and vociferous critic of the tax hikes being implemented by the committee’s chairman, Oregon Senator Ron Wyden – his father.
The public dispute between son and father over the elder Mr. Wyden’s persistent efforts to tax the wealth of the super-rich and close the loopholes that have benefited especially the wealthiest financiers has accentuated a particular phenomenon that has helped to protect America’s billionaires. Every time Congress weighs in on taxing them, the merely rich rush to interfere for the fabulously rich.
Adam Wyden, 37, made it clear that he doesn’t want to take his family conflict too far.
“The problem is bigger than my father. I’m not interested in discussing anything personal,” he said in a short phone call before refusing to continue. He said he was “no Trumper” and “no Ocasio” — referring to New York Representative Alexandria Ocasio-Cortez, an icon of the Democratic left. He’s a libertarian, he said, raised in Washington, DC, who moved to Florida “to get away from the food struggle.”
But he has gone public with his grievances against his father’s proposals an appearance last month on CNBC which he recommends checking out, and in a tweet responding to the elder Mr. Wyden’s claim that Elon Musk and other billionaires shouldn’t be allowed to decide whether to pay taxes based on a Twitter poll.
“Why does he hate us / the American dream so much?!?!?!?!” Adam Wyden said in the Twitter post last month. “The reality is: Most legislators have never built anything…so I think it’s easier to mindlessly and haphazardly tear things down.”
His father prefers to avoid the subject.
“He doesn’t talk to me about his business, and I don’t talk to him about mine,” Senator Wyden, 72, said in an interview on Wednesday.
But as President Biden’s $2.2 trillion social safety net and Senate climate change bill languished, Mr. Wyden has kept alive the proposals his son has spoken out against. One would tax the annual capital gains of about 700 American billionaires, some of whom were shown in a series of ProPublica reports to pay a small portion of their wealth in taxes, while some paid no income tax at all. The proposal would raise $557 billion in 10 years and turn the Build Back Better Act into a bona fide deficit reducer.
Another would change the rules that business partnerships have used to evade taxes and evade Internal Revenue Service audits. Yet another would close the so-called “carry-interest” loophole, allowing some hedge fund and private equity managers to claim the fees they charge clients as capital gains, not income, and pay much lower tax rates.
Monte A. Jackel, an expert on partnership taxation and attorney at tax law Leo Berwick, said Adam Wyden would undoubtedly pay higher taxes under some of his father’s proposals. The senator’s efforts to close the loophole would mean that the income on which his son now pays 20 percent tax would instead be taxed at 37 percent annually.
Attempts to end offshore partnerships could harm the younger Mr Wyden indirectly, costing him some clients, said Mr. jackel. He pointed to the structure of Mr. Wyden’s fund, which includes a master fund partnership in the United States and a foreign offshore feeder company, allowing tax-exempt and foreign investors to avoid US tax.
But Adam Wyden is hardly one of the big whales most Senate Democrats are willing to pay for their expenses. With three employees, just over 150 investors and $329 million in assets under management, ADW Capital Partners is successful but not a titan. Citadel Advisors, a major hedge fund, has $235 billion in assets and more than 2,000 employees.
“Maximum,” Adam Wyden could have $12 million in adjusted gross income, said Steven N. Kaplan, a professor of finance at the Booth School of Business at the University of Chicago.
He would not be affected in any way by his father’s wealth tax, which would only be levied on people with $1 billion in assets or $100 million or more in income for three consecutive years. He could be affected by a provision in the House’s version of the Social Policy Act that would impose a 5 percent surcharge on income over $10 million. But his father has said he’d much rather hit billionaires than millionaires, and has complained that the House plan is taxing NBA players while team owners hold sway.
Still, Adam Wyden came into the picture by defending one of his father’s real targets, Mr. Musk, after the Tesla founder asked Twitter followers if he should sell stock of the company and pay taxes on it, and then had Senator Wyden. offended with what appeared to be a vulgar little one.
“Fortunately, I think I can put together ‘investment profit’ faster than my father and his cronies can confiscate it,” wrote Adam Wyden.
Praised on CNBC’s “Squawk Box,” he told on air. “Amazon, Netflix, Google, Tesla: I mean, we’re jealous of the rest of the world,” he said. “People come to this country to build great businesses, and I want it to stay that way.”
Without referring to his son, the elder Mr. Wyden suggested a possible reason for his position: “Many millionaires may consider themselves the billionaires of tomorrow.”
Dennis Kelleher, head of Better Markets, a group campaigning against income inequality, said ranking the little guys to protect the big guys “always happens.” Small business owners are protesting inheritance taxes they will never pay. Community banks are protesting regulations targeting the big banks that are their biggest competitors. Minimum wage workers are somehow framed as the targets for IRS enforcement proposals aimed at the ultra-rich.
“Not only does it disrupt the discussion of incredibly important policies,” he said, “it ultimately advances the interests of this very small number of people and industries who have a stranglehold on public policy in Washington.”
Adam Wyden is a reluctant rebel. He said he was “not interested in taking part in a Wyden-versus-Wyden” story, and was more interested in talking about his Jewish grandfather cheating on his medical exam to win the chance to enter Normandy. fall on D-Day and become a decorated war hero.
He’s not the only rich person standing up for the fantastically rich. The billionaire class has long relied on ranchers and ranchers to curb efforts to tax inheritances more heavily. This year, the tactic of nullifying a proposal from Mr. Biden that would have put the value of inherited assets at their original purchase price, not their value at the time of the original owner’s death, worked.
That “rise” in the value of an inherited asset means that the unrealized gains over a lifetime are often never taxed, a boon to wealthy heirs, who are protected in Washington by those deemed politically untouchable. So are family farmers, who are unlikely to be affected given the Democratic proposals protecting farms, ranches and small businesses.
Two former Democratic senators from rural states, Max Baucus of Montana and Heidi Heitkamp of North Dakota, lobbied against Biden’s proposal and quickly defeated Senator Jon Tester, the current Democrat from Montana, who killed it in October in the name of “our family.” farms, ranches and small businesses.”
Senator Wyden insists he’s not giving up.
“Next year, when people figure this out, after hearing over and over that billionaires pay little or nothing,” he said, they should see that changed. He added: “We are sticking with it.”