Facebook co-founder Eduardo Saverin became a billionaire as a result of the Facebook IPO but apparently that wasn’t enough money for the 30-year-old. Saverin renounced his citizenship prior to the windfall allegedly in order to avoid paying millions in U.S. taxes. Saverin says his decision was based solely on his desire to live in Singapore, which not-so-coincidentally has no capital gains tax. In carefully worded statement, he said: “I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government. I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen.” [emphasis added]
Democratic Senators Chuck Schumer (NY) and Bob Casey (PA) say “(We) have a status update for him: pay your taxes, or don’t set foot in the United States ever again.” The senators have introduced legislation that would ban Saverin from entering the U.S. and subject him to a 30% tax on capital gains on U.S. investments. The Ex-PATRIOT Act, which stands for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act,” would apply to anyone with net worth of $2 million who renounces citizenship to avoid paying taxes, as determined by the IRS. “Mr. Saverin’s social network is about to get a lot smaller,” Schumer warns.
However, Saverin still has lots of friends like fellow tax dodger Rush Limbaugh. “I left New York state for the same reason. Now, I didn’t have to renounce citizenship, but I left New York state for the same reason. I moved to a state with no state income tax,” brags the radio host.
“If it’s a more favorable tax haven that you can find elsewhere and you go there, why is it automatically that you are unpatriotic? Why is it automatically that you are a coward, that you are not paying your fair share? It’s this whole class envy thing rearing its head again.”
Lobbyist Grover Norquist went so far as to compare the Jewish author of the bill to a Nazi. He likened the bill to the Reichsfluchtsteuer, a 25% tax levied on Jews fleeing persecution.
“I think Schumer can probably find the legislation to do this. It existed in Germany in the 1930s and Rhodesia in the ’70s and in South Africa as well,” said Norquist. “He probably just plagiarized it and translated it from the original German.”
Forbes Editor John Tamny lionized Saverin in his op-ed: “For De-Friending The U.S., Facebook’s Eduardo Saverin Is An American Hero.”
“In Saverin’s case, his decision to renounce his U.S. citizenship will have a definite impact, and for that, those of us who seek smaller government should view him as a hero,” writes Tamny. “Saverin’s decision will starve the feds of revenue they would almost certainly waste, it will force a rethink of a tax code that penalizes income and investment success, and the unconsumed dollars kept from the hands of government will reach today’s and tomorrow’s businesses. Let’s raise a glass to Eduardo Saverin. He’s a true American hero.”
While most people shy away from being called a hero, Saverin revels in it. Saverin’s Facebook page features an article from the Brazilian magazine Vega that calls him “an American hero.”
House Speaker John Boehner called Saverin’s actions “absolutely outrageous” on ABC’s This Week. Boeher said he would support the bill if necessary but pointed out there’s already an existing law, referring to a 1996 statute introduced by Senator Jack Reed of Rhode Island.
In fact, Sen. Reed has already written a official letter urging to Homeland Security Secretary Janet Napolitano enforce Section 212(a)(10)(E), which states:
“Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the [Secretary of Homeland Security] to have renounced United States citizenship for the purpose of avoiding taxation by the United States is excludable.”