Boehner Piles On FB Founder
There is so much inaccurate and misleading information floating around about Facebook Co-Founder Eduardo Saverin and his tax avoidance that it is time to point out a couple of things.
1. Renouncing U.S. Citizenship does not help you avoid taxes up to that point. In other words, Mr. Saverin still had to pay capital gains on his FB shares based on the value on the date that he renounced his citizenship. Which means that he owed (or already paid) hundreds of millions of dollars in capital gains taxes upon his exit.
2. He will have to pay the taxes that have accrued no matter where he lives. In other words, he is paying his “fair share” on what he earned as a U.S. Citizen. What he earns after that is between him and his new home country. The fact that he owns U.S. assets (FB shares) would make it rather easy for the IRS to collect the taxes that he owes. If he doesn’t pay, they can put a tax lien on his remaining FB ownership.
“There’s already a law on the books, George,” John Boehner said to George Stephanopoulos . “But this is outrageous. This is absolutely outrageous — that somebody would renounce their citizenship to avoid paying taxes. And yes, it’s already against the law.”
Senators Chuck Schumer and Bob Casey have been on the case for a while now. “Mr. Saverin has decided to ‘defriend’ the United States of America just to avoid paying his taxes,” said Schumer. “We aren’t going to let him get away with it so easily.”
“This guy just thinks he can rip us off by engaging in this scheme,” Casey, D-Pa., said.
“Saverin has turned his back on the country that welcomed him and kept him safe, educated him and helped him become a billionaire,” Schumer, D-N.Y., said. “This is a great American success story gone horribly wrong.”
ABC New’s entitled their article, “Facebook’s Eduardo Saverin ‘Spits in the Eye of the American People.’
Well, I don’t feel like Mr. Saverin “spat in my eye.” He earned money here and paid taxes on it (and will pay more if he hasn’t already). If he wants to leave then I think it is his loss. But, I think that if Mr. Saverin wanted to come back and start another Billion dollar company he should be welcomed back. Senator Schumer says that this country educated him and helped him become a billionaire. That is true. But, without Mr. Saverin’s money, Facebook may never have gotten started. It was his family money that financed Facebook from the beginning. Now, look how many Americans have become billionaires because of Mr. Saverin.
Let’s be clear. I do think that everyone should pay their fair share of taxes. But, there are two issues here worth mentioning:
1. We live in a Global Economy. Thus, we have to compete globally. The U.S. is the only country in the world that taxes it’s citizens on worldwide income no matter where you live. If someone leaves because U.S. taxes are too high that should tell us something. Also, the reporting requirements for U.S. Citizens living abroad are cumbersome. Just to have a foreign bank account means that you have to report the information to the IRS every year on Form TD F 90-22.1. Not reporting it results in a fine of $10,000 per occurrence. Just that requirement alone would make someone consider renouncing their U.S. Citizenship. Think about it. If you live overseas and you have two checking accounts, a savings account and business account and you forget to report those accounts to the IRS for two years, you could owe $80,000 in penalties, just for not letting them know that “hey, I have some foreign bank accounts.” And, of course, living overseas means that you have to pay taxes in the country where you live and to the U.S. Sure, you can exempt about $100,000 or so, but for the high income earners that doesn’t help much. Singapore doesn’t have a capital gains tax which could be the reason that Saverin chose that country. But, Singapore will benefit from him living there in other ways because of the money he will spend and invest in their country. Thus, Singapore is competing in the Global Economy by offering incentives, whereas Schumer is competing by trying to force people to stay.
2. If he owes taxes, he should have to pay them. I haven’t heard anyone report that Mr. Saverin said he isn’t going to pay the taxes that are actually due. But, to try to pass a new tax law just because of him? Come on. That is a little ridiculous.
In a time where we should be encouraging overseas investment into our economy, new laws like the one Senator Schumer is espousing would only discourage people from doing business here.
As far as Speaker Boehner is concerned, he would be much better served focusing on cutting the Federal Deficit by cutting spending instead of attacking Mr. Saverin. Perhaps if our Congress would focus more time and energy on finding ways to cut spending and finding ways to bring ex-patrioted dollars back into the U.S. instead of trying to squeeze every last dollar of possible taxes out of people on the other side of the world we wouldn’t be in the financial position we are in.