Eduardo Saverin, co-founder of Facebook, is saving at least 67 million in tax dollars by renouncing his U.S. citizenship.Chuck Schumer (D-NY) and Bob Casey (D-PA) aren’t happy about that.
The two Senators will introduce the “Ex-PATRIOT Act” to punish ex-citizens who ditch the U.S. for lower tax rates.
It’s short for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy.”
Current law would already bar Saverin from reentering the country if it’s determined that he left for tax-related reasons.
But Schumer and Casey want to improve the law by imposing a new capital gains tax on wealthy individuals like Saverin who renounce citizenship and move to tax havens. If the expats don’t pay, they can’t come back.
They made it very clear the legislation is about Saverin.
“Mr. Saverin has decided to ‘defriend’ the United States of America just to avoid paying his taxes. We aren’t going to let him get away with it so easily,” Schumer said in a statement.
Saverin’s spokesman said last weekend it’s not about the taxes, it’s about finances.
To renounce his citizenship, Saverin had to pay an “exit tax,” which let the government collect some of the taxes he would have paid if he stayed, he told the New York Times.
Saverin now lives in Singapore, where the capital gains tax is… 0%.
“It’s infuriating to see someone sell out the country that welcomed him and kept him safe, educated him and helped him become a billionaire,” Schumer said in a release. “This is a great American success story gone horribly wrong. We plan to put a stop to this tax avoidance scheme. There should be no financial gain from renouncing your country.”
The most surprising thing about the legislation is that it targets anyone with a net worth above $2 million or an average income tax liability of at least $148,000 in the past five years. Expats who meet either criterion “will be presumed to have renounced their citizenship for tax avoidance purposes.”
These expats will get the chance to prove to the IRS they have other reasons to expatriate, but the IRS has the final say.
Senator Casey couched the legislation in Occupy terms: “We simply cannot allow the ultra-wealthy to write their own rules.”
In the meantime, Saverin, who told the New York Times that he fancies himself a “global citizen,” will keep raging in Singapore.
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