Paulson executives, too, have already taken steps that may allow them to pay lower taxes. Last year, they put about $450 million into a new Bermuda reinsurance company that in turn invested all of its assets in Paulson & Co. funds. The structure positions them to defer any taxes on investment income from the funds for years, and to pay only the lower capital gains rate when they do.

Occupy Visit

Moving to a Caribbean island four hours by plane from New York City would be an unusual choice for Paulson. He grew up in Queens and graduated from New York University. He’s worked in Manhattan for the last three decades and last year donated $100 million to help conserve Central Park, steps from his six-story townhouse.

In October 2011, when Occupy Wall Street protesters marched by the homes of Manhattan’s billionaires, Paulson chided them by pointing out his loyalty to city.

“The top 1 percent of New Yorkers pay over 40 percent of all income taxes, providing huge benefits to everyone in our city and state,” his firm said in a statement at the time, adding that the hedge fund had opted to stay in New York rather than flee to a low-tax state. “Instead of vilifying our most successful businesses, we should be supporting them and encouraging them to remain in New York City and continue to grow.”

Losing Touch

Paulson rose to fame in 2007 with a successful bet that subprime mortgages would tumble. The wager produced $15 billion in profits for his hedge fund and turned him into one of the 100 richest people in the world, with an estimated wealth of $11.2 billion as of last week, according to the Bloomberg Billionaires Index.

The manager lost his touch in the past two years, posting losses in several strategies in 2011 and 2012, as bets on an economic recovery in the U.S., a rally in gold and a breakup of the euro proved wrong or poorly timed. Since the end of 2010, he has lost 64 percent in his Advantage Plus fund, once the firm’s largest. This year, his $900 million Gold Fund has dropped 26 percent amid a slump in the metal, after more than a decade of gains.

The Puerto Rican tax law provides a boon for someone like Paulson, who earns most of his money from investments. The federal rate for top earners in the U.S. is 23.8 percent on long-term capital gains and dividends and 39.6 percent on ordinary income, which includes short-term gains and interest. State and local taxes can push the marginal rate for rich New Yorkers higher.

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