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.”