Business, Economics and Jobs

Senators' tax evasion bill would target Facebook's Eduardo Saverin

Eduardo Saverin, co-founder of Facebook, has renounced his US citizenship ahead of the company's IPO.
Credit: Jason Kempin

Two Democratic senators proposed legislation on Thursday that would stop expatriate like Facebook co-founder Eduardo Saverin from re-entering the country, according to AFP.

Sen. Chuck Schumer and Bob Casey were outraged by what they considered to be Saverin's deliberate tax avoidance when he renounced American citizenship and opted to settle in Singapore.

By renouncing his American citizenship, the Brazilian-born Saverin would avoid at least $67 million in US taxes, according to The New York Times.

"Mr. Saverin has decided to ‘defriend’ the United States of America just to avoid paying his taxes. We aren’t going to let him get away with it so easily," Schumer said, according to The Times. "It’s infuriating to see someone sell out the country that welcomed him and kept him safe, educated him and helped him become a billionaire."

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"We simply cannot allow the ultra-wealthy to write their own rules," said Casey, according to NPR.

Under the bill, called the "Ex-PATRIOT" Act, which stands for "Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy," any expatriate with "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, reported The Washington Post.

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People who fall under that category would have to pay 30 percent capital gains tax. No penalties would apply if an expatriate could prove a legitimate reason for renouncing US citizenship, said The Post.

"US citizens are severely restricted as to what they can invest in and where they can maintain accounts," Saverin's spokesman, Tom Goodman, said this past weekend, according to The Wall Street Journal. "Many foreign funds and banks won’t accept Americans. This was a financial rather than a tax motive."

If a former citizen such as Saverin wanted to return to the US, he would have to pay all the taxes he owed in order to return, according to CBS News.

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