In just seven years, the top annual pay for hedge fund managers has jumped from just over $1 billion to just shy of five times that total.

The hedge fund industry’s trade journal has just released its annual figures for hedge fund manager earnings. The big winner for 2010: John Paulson. His winnings: the biggest ever, an incredible $4.9 billion.

The trade journal AR has been tracking hedge fund pay almost since the new century dawned. The first hedge fund manager to break the $1 billion barrier, Edward Lampert, squeaked by with $1.02 billion in 2004.

Here’s how much the annual winners have raked in over the years since:

2005 James Simons, $1.5 billion              

2006 James Simons, $1.7 billion              

2007 John Paulson, $3.7 billion

2008 James Simons, $2.5 billion

2009 David Tepper, $4 billion                  

2010 John Paulson. $4.9 billion

The most amazing aspect of all these windfalls? Hedge fund managers enjoy what may be the most outrageous tax loophole ever. The infamous “carried interest” loophole lets them define most of their income as a capital gain.

The result: On every $1 billion in carried interest income, they save a whopping $200 million in taxes.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.