Vanguard's Low Blow
To summarise, Investment Managers manage Funds. When you invest in a mutual (or hedge or venture or wine [1]) fund, you put money in to a Fund. The Fund then pays an Investment Manager a fee for managing it. (Of course, you, the investor, indirectly pay this fee.)<p>Vanguard is mutualized. This means the Funds <i>own</i> the Investment Manager. Unsurprisingly, the Funds vote for lower fees. The result is Vanguard charging its funds staggeringly lower fees than average [2]. This also means Vanguard makes less profit than competing Investment Managers.<p>Enter this guy [3]. He observes Vanguard paying less tax (on account of making less profit) than its competition. He concludes that Vanguard is dodging its tax bill. Vanguard, he argues, should be taxed <i>as if</i> it charged the higher fees it doesn't. They should also pay the back taxes they would have owed if they had charged these fees and earned those profits, again, that they didn't. This last part is helpful because he likes the whistleblower bonus the IRS would pay him if the case succeeds [4]. (Or maybe not [5].)<p>If this sounds bonkers, it's because it likely is. We don't tax SpaceX <i>as if</i> it were bilking the U.S. government on par with its competition. In any case, the boosted post-fee gains from Vanguard's funds are still taxed at the individual level. But my pie is better than your pie and so the idiots get their air time.<p>[1] <a href="http://www.wineinvestmentfund.com/disclaimer.aspx?url=http://www.wineinvestmentfund.com/index.aspx" rel="nofollow">http://www.wineinvestmentfund.com/disclaimer.aspx?url=http:/...</a><p>[2] <a href="https://investor.vanguard.com/mutual-funds/low-cost" rel="nofollow">https://investor.vanguard.com/mutual-funds/low-cost</a><p>[3] <a href="https://www.linkedin.com/in/david-danon-a0a5017" rel="nofollow">https://www.linkedin.com/in/david-danon-a0a5017</a><p>[4] <a href="http://www.newsweek.com/2015/12/25/vanguard-whistleblower-tax-dodge-complaint-400901.html" rel="nofollow">http://www.newsweek.com/2015/12/25/vanguard-whistleblower-ta...</a><p>[5] <a href="http://articles.philly.com/2015-11-19/business/68386489_1_david-danon-new-york-state-joan-madden" rel="nofollow">http://articles.philly.com/2015-11-19/business/68386489_1_da...</a>