Friday was the launch of Facebook’s highly anticipated IPO, finishing the day with a mere 23 cents a share gain, suggesting a cooler-than-expected reception. Rather then focusing on the news of the newly minted billionaires in Northern California, the “Real News” panel opened Friday discussing the action of Sens. Chuck Schumer and Bob Casey in Washington D.C., who have introduced legislation that would seek to tax Ex-patriot millionaires and billionaires at a 30 percent capital gains rate based on the highly publicized citizenship withdrawal of Facebook co-founder Eduardo Saverin.
Saverin is taking up residence in Singapore, a country without a capital gains tax, making a move that will potentially save him $67 million dollars in taxes. There’s a lot of outrage over what many see as a tax dodge, but Saverin points out he does have to pay a 15% exit tax. The Washington Post reports on what will go into the “ex-PATRIOT Act:”
Under the proposal, “any expatriate with either a net worth of $2 million or an average income tax liability of at least $148,000 over the last five years will be presumed to have renounced their citizenship for tax avoidance purposes,” according to a release from Schumer’s office, and they would pay 30 percent capital gains tax — the same rate as people pay in the U.S.
If an expatriate can prove he or she has a legitimate reason for renouncing U.S. citizenship, no penalties will apply.
The bill would tax any prospective gains an expatriate who has renounced his or her citizenship in the past ten years who did so for purposes of tax avoidance. In Saverin’s case, Schumer spokesman Brian Fallows said that if the Facebook co-founder liquidates all his holdings in the company before the bill is passed, he will escape penalty. However, if he takes his time selling off his assets, for the purpose of letting it grow and then seeks to sell off and he would pay 30 percent on those earnings.
According to Schumer’s office, 1,780 people gave up their citizenship in 2011, a rise from 235 in 2008.
Some argue though that the legislation goes too far by harming the U.S.’ pro-business global reputation, and forwards un-American sentiments. A recent column in The Wall Street Journal makes sure to acknowledge that the editorial board does not have any sympathy for Saverin, but believes the suggested legislation appeals to “the age of envy” and is a move by senators who “hope to score political points by punishing the fleeing rich who will strike most Americans as unpatriotic.”
Whatever Mr. Saverin’s motivation, the more important point is that it is his decision, however misguided. America was built on millions of similar individual decisions to come to our shores. It is precisely that ability to decide for oneself that has made America such a magnet for two centuries.
The way to continue to be a magnet for the best and brightest is not to impose Soviet-style exit taxes to punish people who want to leave the country. That is what oppressive and demagogic regimes do, and it’s humiliating to see U.S. Senators posture in such fashion. The way to punish Mr. Saverin is to make the U.S. so appealing and dynamic again that he’ll be sorry he ever left.
Will Cain had some strong feelings towards the ex-American during the opening segment of “Real News” Friday.
“Eduardo Saverin is an ass” said Cain Friday. With that in mind though, Will took agreement with many of the points in the Wall Street Journal column, questioning whether the punishment sets a more negative precedent than Saverin’s action.
S.E. Cupp commented that the story gives further evidence that lawmakers should work to make the United States a more attractive place for entreprenuers and business leaders, who would in turn want to stay here.