In Defense Of Eduardo Saverin
One of Facebook’s founders, Eduardo Saverin, is apparently emigrating to Singapore ahead of the company’s IPO which would bring him and his $3.64 billion stake in the company a windfall.
But here’s the rub: If it’s determined that he’s emigrating to avoid taxes he could be barred from ever entering the United States again.
The timing of the move has raised eyebrows since Singapore does not have a capital gains tax, which could vastly reduce his bill on any payout.
According to an immigration law, he could be refused re-entry to the U.S. if he is judged to have relocated for the purposes of avoiding taxes.
Section 212 of the law, highlighted by Talking Points Memo, states: ‘Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is excludable.’
A link was also posted on TPM to a document that someone would need to file with the U.S. State Department’s Bureau Of Consulate Affairs when renouncing citizenship.
The document says: ‘My renunciation/relinquishment may not exempt me from United States income taxation…I understand that if my renunciation of United States citizenship is determined by the United States Attorney General to be motivated by tax avoidance purposes, I will be found excludable from the United States under Immigration and Nationality Act, as amended.’
Now, I don’t expect a billionaire like Saverin to evoke a lot of sympathy, but isn’t he making a rational decision given the political landscape in America?
At the end of this year the Bush tax cuts are set to expire. Given that we’re in an election year, and given that Democrats control the White House and the Senate, it seems unlikely that they’ll be extended. That would mean the tax on investment income would soar from 15% to almost 40%, and the tax brackets would move from a bottom rate of 10% and a top rate of 35% to a bottom rate of 15% and a top rate of, again, nearly 40%.
In fact, there are some $500 billion in tax hikes – a half trillion dollars – scheduled to expire at the end of this year. Some are calling it “taxmageddon” and the term is appropriate. And on top of it all, Democrats don’t forget that Democrats are still pushing for the so-called “Bufett Rule” which would be a 30% surtax on millionaires.
If I were a highly-mobile billionaire set to reap a windfall from my investments I might take extraordinary measures to protect my fortune too. So too would a lot of you, I think.
Maybe we should reform our government spending so that huge tax increases aren’t necessary to close deficits. Maybe, instead of blaming rich people who use their means to legally avoid taxes, we should promote a tax environment that doesn’t encourage those people to leave our country.
I’d rather have Mr. Saverin in America, spending his fortune here in our economy, then enriching some other country’s economy.Tags: bush tax cuts, eduardo saverin, Taxes