Senators Chuck Schumer (D-NY) and Bob Casey (D-PA) have proposed a new law that would “set a 30 percent capital gains tax rate for expatriates on all future investment,” and ban people like Facebook co-founder Eduardo Saverin from reentering the U.S., Gizmodo and POLITICO report.
"Saverin has turned his back from the country that welcomed him, kept him safe, educated him and helped him become a billionaire," Sen. Schumer said at a press conference with Sen. Casey, adding that the country should “defriend" Saverin.
Saverin, you may remember, renounced his American citizenship shortly before the social network announced it was going public.
“Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history for an Internet company,” Bloomberg reports.
“Saverin’s stake is about 4 percent, according to the website Who Owns Facebook. At the high end of the IPO valuation, that would be worth about $3.84 billion,” the report adds.
Saverin’s decision to renounce his citizenship and move to Singapore, a country where there is no tax on capital gains, could save him as much as $67 million. Unsurprisingly, the thought of losing all that taxable income has really riled up a couple of senators.
"This is a great American success story gone horribly wrong," Sen. Schumer said.
Tom Goodman, spokesman for the Facebook co-founder, claims his client, who has lived in Singapore since 2010, didn't base his decision on taxes but on the fact that he has major investments in that country.
“[Saverin] recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Goodman wrote in an e-mail to Bloomberg.
And although Saverin is still subject to an “exit tax” on his Facebook holdings prior to dumping his passport, “it will be much less than he would have paid if he remained an American citizen once Facebook had gone public,” POLITICO’s Tony Romm writes.
Saverin insists it's not about avoiding taxes.
“I’m not a tax expert,” he said, according to the NYT. “We complied with all the known laws. There was an exit tax.” “This had nothing to do with taxes. I was born in Brazil, I was an American citizen for about 10 years. I thought of myself as a global citizen."
Nevertheless, senators Schumer and Casey want to ensure nothing like this ever happens again.
“The two Democrats unveiled a bill called the Ex-PATRIOT Act, or the ‘Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy’ Act,” Romm reports.
“It may never even rise to the level of committee consideration, but if it does pass, it would require Saverin and others who renounce citizenship to pay taxes at a 30 percent rate on any U.S. investment,” he adds.
However, the penalty will only "prospectively impose a tax on an individual's future investment gains," according to the bill.
This means "it may not touch amounts Saverin stands to make with the IPO and others who long ago dodged the tax bullet," the report adds.
“Schumer said it would still affect Saverin and others who invest in the United States to maintain their net worth,” POLITICO notes. “The bill would create exemptions for those who have good reasons to give up their citizenship and sets a floor on who would be affected by the tax penalties.”
Sen. Schumer ended with a message for the Facebook co-founder: “Pay your taxes in full, or don't ever try to step foot in the United States again.”
Sen. Chuck Schume, Eduardo Saverin, & Sen. Bob Casey
Well, what does that mean?
"If Saverin were to try to visit, say, Silicon Valley from his new home in Singapore (where he'll pay zero taxes on his Facebook doubloons), he'd be promptly turned around and sent packing," Gizmodo's Sam Biddle writes.
Sen. Schumer insists the bill isn't targeting Saverin personally.
"We're not targeting one person, we're targeting all people who have done this over the past 10 years," Sen. Schumer said.
Writing on The Blaze blog, Nick Rizzuto had strong words for senators Schumer and Casey:
Let’s call this what it is: a punitive tax and permanent exile for wealthy Americans who choose to flee the atmosphere that has been created by the government.
This is what you get from a government that refuses to acknowledge and address the conditions that drive out its own citizens.
This article has been updated.