Paulson had to step down from his position as CEO of Goldman Sachs and be confirmed by the United States Senate. Next, assuming he was confirmed, Paulson would be required by law to liquidate his entire portfolio of stocks prior to officially taking office.
For the average person, this second catch probably wouldn't be a huge deal. For Henry Paulson however, that meant he would be forced to sell off his entire 1% stake in Goldman Sachs (worth $485 million dollars)
He also would have to be willing to take a paycut from $40 million per year to around $183 thousand.
Riddle: Why on earth would he agree to do all this?
- A. To receive $500 million in tax free money
- B . To possibly avoid the biggest downturn since the Great Depression
- C. Because in 1989, (Under Bush, Sr.) the US Government has created a special tax loophole which created a one-time loophole for a handful of high level positions that would help attract highly talented professionals away from the private sector. And this tax loophole would eliminate a $50 million dollar tax liability for Henry Paulson.
- D. All of the above
Scroll below to find the correct answer.
The correct answer is D. All of the above. Without this loophole, had Henry sold his shares at the exact same price and time, he would have been liable for more than $200 million worth of state and Federal capital gains taxes.
