The Potential Repercussions of Facebook’s Eduardo Saverin
Eduardo Saverin, a partial owner of Facebook recently made headlines because of his move to renounce his U.S. citizenship. According to the beliefs of some of our nation’s leaders, Saverin’s incentive is largely based on U.S. tax avoidance.
Saverin has lived in Singapore for the past three years, a country where, unlike the U.S., there is no capital gains tax. By moving his citizenship, he will avoid all U.S. capital gains tax from the profits of his ownership in Facebook.
According to an article in Accounting Today written by Michael Cohn, this move could potentially save Saverin $67 million in U.S. taxes. Others may prefer to view this move as potentially costing the U.S. $67 million in tax revenues.
In response, Senators Charles Schumer and Bob Casey have proposed a law to discourage other U.S. citizens from following Saverin’s lead. This law would require any expatriate with either a net worth of $2 million or an average income tax liability of at least $148,000 over the last five years to demonstrate to the IRS a legitimate reason for renouncing his or her citizenship. If the IRS does not buy the reasoning presented, it would have the ability to impose a 30% tax on future investment gains no matter where the individual lives. The law would also ban any individual avoiding these taxes from ever returning to the U.S.
The hope is that a law like this would take away any possible financial incentive for anyone considering giving up their U.S. citizenship.
Click on the following link to read Cohn’s full article: Senators Intro Plan to Stop Facebook Co-founder from Avoiding Taxes