In September of 2011, Eduardo Saverin, one of the co-founders of Facebook, renounced his United States citizenship and eight months later, Facebook, Inc. held its initial public offering. The Brazilian-born entrepreneur says he renounced his citizenship to help facilitate a permanent move to Singapore, where he has been living since 2009, but senators Charles Schumer (D-N.Y.) and Bob Casey (D-Pa.) think Saverin’s primary motivation was to avoid paying taxes on his stake in Facebook post-IPO.
A news release from Senator Schumer’s office called Saverin’s actions an “avoidance scheme.” Now the senators are pushing a bill known as the “Ex-PATRIOT” Act to punish people like Saverin for dodging taxes, but the bill has been strongly criticized by anti-tax activists who have compared it to oppressive Nazi and Soviet regime tax policies.
Under the proposal, former U.S. citizens found to be avoiding taxes by renouncing citizenship will be subject to a 30 percent capital gains tax no matter where they live and will be banned from the U.S. forever.
Is the proposed “Ex-PATRIOT” Act going too far? Would it discourage bright entrepreneurs from becoming U.S. citizens contributing to the American economy?
Jesse Drucker, reporter at Bloomberg News