Facebook Co-Founder Could Be Kicked Out Of USA

Facebook co-founder Eduardo Saverin is known by most through Andrew Garfield’s spellbinding portrayal in The Social Network, where he was quite the sympathetic character, having stupidly signed away his rights to the company. Later lawsuits restored his status making him a very rich man.

And, it is that wealth that has landed him in the middle of an international scandal that shines a spotlight on tax law loopholes. Unless you live under a rock, you know that Saverin has renounced his U.S. citizenship in favor of Sinagpore, where he has been living for a few years.

Not a crime, of course. But, the timing – just days before Facebook goes public, thereby saving him hundreds of millions in taxes – is suspect. So much so that two senators have proposed legislation that could hit it Saverin with heavy taxes and bar him from ever reentering the United States.

Sens. Chuck Schumer (D-N.Y.) and Bob Casey (D-Pa.) are unveiling the Ex-PATRIOT Act, which stands for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy,” on Thursday. The bill would force anyone who “expatriates for a substantial tax purpose — as judged by the Internal Revenue Service” to pay a mandatory 30 percent tax on future capital gains. The ex-citizens would also be turned back at the border if they ever tried to come back.

The New York Times reported today that Saverin said he had been misunderstood when it came to allegations of tax avoidance. “I’m not a tax expert,” he told the Times. “We complied with all the known laws. There was an exit tax.”

The tax laws that apply to extremely rich people who renounce their citizenship are, not surprisingly, hideously complex. (Here are two tax professors trying to explain some of the many variables.)

In a statement issued this evening Eduardo Saverin denied he was ungrateful to the United States.

He wrote, “My decision to expatriate was based solely on my interest in working and living in Singapore, where I have been since 2009. I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government. I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen. It is unfortunate that my personal choice has led to a public debate, based not on the facts, but entirely on speculation and misinformation.”

2 comments

  1. I can’t help but think this story has gotten blown way out of proportion. Eduardo in not a natural born citizen, has always traveled the world, and has lived in Singapore for years. Even if the timing was intentional, so what? I have clients who dump a big budget at years end so as to avoid the taxes. I personally take whatever legal routes I can to avoid taxation. As does every company with half a brain.

    To kick people like Eduardo out of this country is to legitimize the crazy Tea Party members who think that Atlas Shrugged is somehow about them. Eduardo helped change things in the world. Facebook doesn’t live in a vacuum, it has impacted the business world in a big way. Both our careers saw a boost. I doubt you were getting a lot of social media consulting gigs to help a company’s visibility on Friendster. And where would Zynga be without everyone spamming us their FarmVille invites on Facebook?

    Eduardo is paying a significant exit tax. He will in one stroke of a pen contribute more revenue to this country then I will likely make in a lifetime. The primary tax savings will come when the stock doubles or triples in value. And since that will happen when he lives elsewhere, I don’t see how the U.S. feels we have any right to it.

    I’m a die hard social liberal. Frankly most GOP rhetoric makes me sick. But this is the area I find myself back on the conservative side. Democrats trying to make an issue out if this is just bad political theatre, and shows how little they know or care about the economy.

  2. Hi Ed, personally, I agree with you. I think Eduardo is certainly within his rights to move anywhere his wants to and adopt whatever citizenship he wants as long as he isn’t breaking any laws. But, it’s social media news, so I had to cover it.

    I do, however, take issue with what you said about FB and our careers. It’s true FB redefined SM engagement and certainly my career has benefitted, as has yours. But, remember, the site opened to the public in 2006, the same year Twitter launched. And, FB didn’t let brands in until 2007. Prior to that, I in fact had MANY clients turning to me to help them leverage MySpace (2003) LinkedIn (2003), YouTube (2004), Blogs, forums and other peer-to-peer media. My first true social media campaign was in 2001, leveraging blogs and message boards to drive peer-to-peer discussion that ultimately created media coverage.

    I certainly get your point and there is no denying the impact FB has had on marketing. But, let’s not pretend it is the ONLY channel for social media engagement. I realize you were making a different point and I don’t mean to put words in your mouth there; there is no denying the site has changed the world – and our careers. But, many other sites/channels have too and I like to remind people of that because I still here so often, “social media means Facebook right?” when you and I both know social media is so much more than just one web site. 🙂

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