Senate Democrats persecute Facebook co-founder Eduardo Saverin
Earlier this week it was reported that Facebook co-founder Eduardo Saverin had renounced his United States citizenship rather than pay taxes on his share of the revenues of Facebook going public, saving him upwards of $100 million in capital gains taxes. The move raises eyebrows, it is becoming increasingly more popular rather than to face the higher tax burden in the United States, though Saverin, who was born Brazil, will owe some money, what is being referred to as an “exit tax.”
But some Senate Democrats aren’t willing to let Saverin off that easy. Sen. Chuck Schumer (D-NY) has introduced legislation that would target Saverin and other people who renounce their citizenship to leave the United States for more tax friendly confines:
Presuming that Saverin moved to avoid paying taxes, Schumer and Democratic Sen. Bob Casey of Pennsylvania on Thursday unveiled legislation to stop what they called a “despicable trend.”
Under their legislation, any American who renounces his or her citizenship for the purpose of avoiding taxes will be punished in two ways: They will be barred from re-entering the U.S., and their future investments in the U.S. will be taxed at a 30 percent rate.
Taking advantage of every Facebook one-liner available, Schumer said of Saverin, “Sen. Casey and I have a status update for him: Pay your taxes in full, or don’t ever try to visit the U.S. again.”
Saverin, who was born in Brazil, told the New York Times that his move had nothing to do with paying taxes.
Schumer said Saverin’s claim “rings hollow.” The senator said it was “outrageous” that Saverin would renounce the country that “kept him safe, educated him, and helped him become a billionaire.” He called Saverin’s story “an American success story gone horribly wrong.”
Current law says that a person who renounces his U.S. citizenship for the purpose of avoiding taxes can be barred from re-entering the country, as Talking Points Memo pointed out this week, but Schumer said there have been problems enforcing the law.
Under Schumer and Casey’s bill, if an American with a net worth of $2 million or a tax liability of $148,000 renounces his or her citizenship, the IRS will presume that person is moving in order to avoid paying taxes. The person in question will be responsible for proving otherwise.
If a former citizen wants to return to the U.S., Schumer said, he could pay all the taxes he owes in order to return.
A couple of things about this. First, Saverin is protected, whether he renounced his citizenship or not, by constitutional protections found in Article I, Section 9, Clause 3 against bill of attainder and ex post facto laws. Congress cannot, after some manufactured outrage, creat a law against it and then charge the person who committed the act with a crime.
Secondly, rather than admit that there is a problem with our tax code and burden, Schumer and Casey target Saverin as the wrongdoer. That’s typical, but sad nonetheless. Saverin will be used as a target for Democrats to justify their tax hikes and other regulations, rather than tackle the real problem, and the number of people exiting the United States will continue to rise.
Over at Libertarianism.org, Aaron Ross Powell notes that, while some — like Schumer and Casey — may talk about the debt he owes to the United States, we owe quite a lot to Saverin ourselves:
Saverin got rich by creating immeasurable value for Americans (and billions others around the globe). He co-founded an enormously successful company, one that in turn lead to the creation of many other enormously successful companies. All of those business employ thousands of Americans, who not only are more prosperous than they probably would’ve been without Facebook, but also pay taxes on all their earnings. So even without its cut of Saverin’s IPO windfall, Uncle Sam comes out ahead, as do all those American workers.
The rest of us gain, too, because we get to have Facebook. Which is cool enough that most of us spend far more time on it than we’d like to admit. Facebook made America (and the world) better.
Which means that instead of raging at Saverin for not wanting to give the bloated federal government in Washington more-more-more of his wealth, maybe we should just call it even.
That’s perspective. Of course, some just aren’t willing to listen.