Eduardo Saverin Leaving The US: Is It The Problem Or A Symptom?

23 May, 2012 by John Hawkins

Print this article Font size -16+

Eduardo Saverin just became an extraordinarily wealthy man and the fact that he’s renouncing his American citizenship is adding an enormous amount to his bottom line.

Alone among Facebook’s 900 million users, Mr. Saverin is special: a billionaire with only the vaguest of causes.

He co-founded Facebook at age 21, then left two years later with a legal settlement that cut him off from Facebook but left him phenomenally wealthy. His stake will most likely be worth more than $3 billion when Facebook goes public Friday.

Reports last week that Mr. Saverin, 30 and born in Brazil, had renounced the American citizenship he gained as a teenager led to considerable criticism that he was skipping out to avoid taxes. He has become a permanent resident of Singapore, which levies no capital gains taxes. Mr. Saverin said he was misunderstood. He first filed to give up American citizenship in January 2011. It became official last September, and the government published the news at the end of April as part of a routine filing.

Coming on the eve of the Facebook I.P.O., the news brought into sharp focus Mr. Saverin’s tax savings, which could easily exceed $100 million.

“I’m not a tax expert,” he said. “We complied with all the known laws. There was an exit tax.” That tax is based on the assets held by a citizen leaving America. The exit tax was intended to make sure the departing wealthy paid something before they decamped.

He professes ignorance about his taxes and refuses to discuss his finances. “This had nothing to do with taxes,” he insisted. “I was born in Brazil, I was an American citizen for about 10 years. I thought of myself as a global citizen.”

Fascinating, isn’t it? Here we have someone who has embraced the liberal vision when it comes to nationality. He doesn’t think of himself as an American, he thinks of himself as a “global citizen.” Isn’t this the attitude liberals are always promoting? Additionally, don’t we hear day-in-and-day-out from the Left how horrible rich guys like Eduardo Saverin are? According to the Left, 1%er’s like Saverin are a plague on the country. They’re evil, they’re awful, they’re selfish — they’re victimizing the poor. There’s just nothing good to be said about guys like Saverin unless they’re handing money to liberals like Barack Obama.

Yet, here we have one of these eeeevvvvviiiillllll rich guys leaving the United States for Singapore and what’s the reaction from the Left?

Senator Schumer’s spokesman Brian Fallon sends along the following retort:

It shows how far many on the hard right will go to defend keeping taxes low on the very wealthy that they are turning someone like Mr. Saverin into a mythic hero despite his fundamentally unpatriotic act.

Update 2: Senator Bob Casey responds to The Journal editorial as well:

While I have respect for differing opinions, the facts here are clear: Eduardo Saverin renounced his U.S. citizenship in order to evade taxes. That action is a slap in the face to hard working American taxpayers and a slight to the country who gave him so much. This legislation will hold people like Mr. Saverin accountable and ensure that middle class Americans aren’t left to foot the bill.

It’s worth noting that backdating this tax as a way of sticking it to Eduardo Saverin is without a shadow of a doubt unconstitutional. According to Article 1, section 9 of the Constitution, “No Bill of Attainder or ex post facto Law shall be passed.” That’s exactly what this is, although sadly, something being clearly unconstitutional doesn’t appear to be much of a hindrance to it becoming law these days.

Getting beyond that, maybe we should be asking the fundamental question: Why is Eduardo Saverin so hot to get out of the United States in the first place? We already noted that like any good leftist, he considers himself to be a “global citizen.” It’s funny that liberals encourage that attitude as much as possible and laugh at real patriotism until it starts costing them other people’s money and suddenly it becomes important for the first time. However, the reason Saverin ultimately is leaving is because it would cost him another 100 million dollars to stay in the United States because of our punitive tax code that rewards failure and punishes success.

Instead of attacking the symptom by coming up with yet another gimmicky bill that won’t work because rich people have the money to find or create loopholes, maybe we should deal with the real problem, which is our tax code. Singapore has a zero capital gains tax. That’s something conservatives have been arguing in favor of for years because it encourages investment — and apparently, it also encourages rich guys to move there. If we had a zero capital gains tax, how many guys like Eduardo Saverin would be moving here to do business instead of looking for ways to keep their money out of this country because of the high taxes?

Eduardo Saverin is no great guy or hero for moving out of the United States. He’s a human being who’s responding to the perverse incentives that liberals like Chuck Schumer, Bob Casey, and Barack Obama want in place. Maybe instead of whinging about Eduardo Saverin, they should be looking to change our tax law to bring more Eduardo Saverins to the United States instead of encouraging them to look for ways to flee to greener pastures.