'Bad Optics' for Trump: Big Backer in Showdown With IRS
Billionaire Robert Mercer's hedge fund fighting $7B in back taxes
By John Johnson,  Newser Staff
Posted May 1, 2017 9:35 AM CDT
President Trump in the Oval Office.   (AP Photo/Pablo Martinez Monsivais, File)

(Newser) – Two key facts about billionaire Robert Mercer: He is, in the words of a recent New Yorker profile, the "reclusive hedge-fund tycoon behind the Trump presidency." Second, the IRS is going after his Renaissance Technologies fund for nearly $7 billion in back taxes. All of which sets up a dicey situation for President Trump, as a story at McClatchy News Service explains. Mercer wants IRS chief John Koskinen booted from office, and he's pushing Trump to fire him before his five-year term expires in November. The president has not tipped his hand on whether he'll do that, but it makes for "bad optics," per the chief ethics adviser in the George W. Bush White House. "The guy’s got a big case in front of the IRS," says Richard Painter. "He’s trying to put someone in there who’s going to drop the case. Is the president of the United States going to succumb to that?"

Mercer, whose daughter Rebekah is a major political player on the right as well, ramped up political contributions to conservative groups after the IRS began investigating his fund's use of a complicated banking method known as "basket options" in 2010 to cut its tax bill, reports McClatchy. The method involves converting short-term gains on trades into long-term gains, which are taxed at a lower rate. The IRS does not comment on ongoing cases, but a Senate panel accused the fund of short-changing the agency of at least $6.8 billion. The company has maintained that it did nothing illegal. One thing that could work in the Mercers' favor: They have long ties to top Trump strategist Steve Bannon. Still, a Columbia professor says that even if the Mercers succeed in getting Koskinen fired, it's doubtful that would upend a years-long IRS case.

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