Anger is swelling at Facebook co-founder Eduardo Saverin’s decision to renounce his U.S. citizenship. Widely seen as a way to avoid hundreds of millions of dollars in taxes when his Facebook stock gains value after their IPO on Friday, two Senators are proposing legislation to make sure he pays his fair share anyway and block him from ever entering the U.S. again.
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, if passed, would mandate a capital gains tax on ALL future earnings if it is deemed by the IRS that a person renounced their citizenship to avoid tax liability. It also would bar them from ever reentering the U.S..
Shumer told reporters,
“This is a great American success story gone horribly wrong. Eduardo Saverin wants to defriend the United States of America just to avoid paying taxes. We aren’t going to let him get away with it. Saverin has turned his back on the country that welcomed him and kept him safe, educated him and helped him become a billionaire.”
Schumer and Casey both saw no reason why the GOP wouldn’t support their bill.
Saverin renounced his citizenship and became a permanent resident of Singapore earlier this week. Saverin told reporters he was misunderstood and had not renounced his U.S. citizenship for tax reasons.
He told The New York Times on Thursday,
“I’m not a tax expert. We complied with all the known laws. There was an exit tax.”
Saverin had to pay an exit tax, which is a one time payment on his capital gains from current holdings. Saverin’s amount was around $365 million dollars. Bloomberg calculated that by renouncing his citizenship now instead of after the IPO already saved him $67 million in income taxes. The biggest benefit to Saverin is that if the value of his Facebook stock rises he will pay zero capital gains on his money because Singapore does not have a capital gains tax.
Saverin’s stock in Facebook is valued at around $4 billion dollars.