
Facebook Co-Founder Gives Up U.S. Citizenship - prs
http://www.businessweek.com/news/2012-05-11/facebook-co-founder-saverin-gives-up-u-dot-s-dot-citizenship-before-ipo
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jandrewrogers
This has been a growing trend for a number of years. Changes in the US tax
code, US laws, and the way the US government interacts with foreign banks has
made increasingly difficult for US citizens, particularly those with assets,
to live outside the US even if they are perfectly happy to pay taxes. Not only
are foreign banks no longer willing to deal with Americans living abroad but
in some cases complying with the aggressive US laws are in conflict with the
laws where the people actually live. Naturally this is very frustrating to
people who live overseas or who are married to citizens of other countries.

The way the US deals with taxes for Americans living overseas is gross
overreach any way you look at it and the increasing difficulty of being
compliant with US laws applied to people living outside the country is driving
this. No other industrialized country treats citizens living outside its
borders in this way and this reflects negatively on the US.

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Aloisius
You can't escape US taxation by giving up citizenship.

He will have to pay the exit tax instituted in the 2008 Heroes Earning
Assistance and Relief Tax Act (HEART) on all unrealized gains he has worldwide
because his net worth is likely greater than $2 million. I believe it is set
at 30%.

As Facebook has announced the strike price, the value of the company and what
his tax liability is, already has a very dollar value.

There used to be a ten year shadow for giving up US citizenship where you'd
still have to pay US gain taxes for 10 years after you gave it up.

And the federal government has the incentive and the means to collect on
someone who is a billionaire.

~~~
blahedo
The article says he actually gave it up last September, so the numbers might
have been fuzzier then. Regardless, he's protected from tax on any subsequent
rise in stock price. You can't escape past or current tax, but you can
"escape" future taxation.

On the ten-year tax shadow: How would that even work? If you were no longer a
citizen, what claim would the US have on your money?

~~~
rada
There is a rule - quite reasonable in my opinion - that if you were to
renounce your US citizenship but then come back for more than 120 days (per
year) during the first 10 years following your "resignation", you are
considered a resident of the US for tax purposes. It is designed to deter
Americans from giving up citizenship solely for tax evasion purposes, as
opposed to actually moving to another country. I imagine one enforcement
mechanism would be the denial of entry.

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laconian
Some friends of mine are yelling "see? our tax code is pushing capital
overseas!" My argument is, that with $4B at stake, even if we had a
"reasonable" income tax, people like this would still seek out tax havens
where the burden is even lower still.

~~~
DanielBMarkham
So you agree with your friends that people act in their best interests,
including changing citizenship, when it comes to taxes, you just disagree on
the amount of money it would take?

~~~
_delirium
I don't think it's true for the vast majority of people. Most Americans,
including most wealthy Americans, are happy to be Americans, even if they
aren't happy about everything in the US. Rejecting your home country for
monetary reasons is a fairly drastic action, and only a very small number of
people take it. I mean, you don't see Bill Gates moving to Monaco or anything.
Not even very-rich people with libertarian politics, like Larry Ellison or the
Koch brothers, are itchin' to leave the country.

In fact the number is even smaller than the raw number of renunciations. A
spot-check at the list of renunciations suggests that most are actually people
who in practice ceased to be Americans long ago, or in some cases never were.
Some were born overseas to American parents and have never lived in the US;
one actor on the list is of Italian origin and moved back to Italy 40 years
ago; etc. Apart from a tiny handful of cases, it seems more like formalizing
situations that already exist (people who aren't really Americans just making
it formal). A number are also people applying for citizenships in countries
that don't recognize dual citizenship, who are required to renounce their
American citizenship to do so.

------
leot
Saverin was born in Brazil and has been living in Singapore for a while. There
are also probably psychological advantages to being out of Zuckerberg's
shadow.

While taxes might have played a role, it's not obvious that this was the
principal factor.

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scott_s
Someone on HN caught that as well:
<http://news.ycombinator.com/item?id=3944467>

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Matt_Mickiewicz
It's common for UK citizens to give up citizenship, prior to an exit in their
business and move to Monte-Carlo or Gilbraltar for a few years to avoid
capital gains tax.

If Facebook blows up on the IPO and the stock value increases 50% or 100% he
could easily be saving $500m - $1b in taxes. It's a no-brainer...

~~~
muyuu
It's more of a no-brainer when he isn't even American. He "became" an American
citizen in record time - arrived in the US in 1992 and was a citizen by 1998.

I'd say citizenship was given a tad too lightly.

~~~
blahedo
He's 30 now, right? So he arrived at age 10 and was a citizen sometime before
16. The rules are (as they should be) a little different for minors.

Edit: dumb math error.

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lbrdn
The lack of social responsibility is what erks me the most about Saverin's
decision. Saverin takes full advantage of the investments and sacrifices made
by countless Americans and then when the country asks for him to uphold his
obligation as a citizen, he leaves to save a few percentage points. This is a
tactic for small thinkers.

~~~
benmccann
I feel it's really unjust the way we treat our fellow citizens living abroad.
I would hate to be taxed both by the US and the country I was living in. He's
already paid very a very large amount of tax for the value he generated while
living in the US. Why should he pay US tax for the value he generates while
living in Singapore or elsewhere?

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alain94040
Presumably, he would be paying long-term capital gains this year, which is
only 15%. Sure, it's 15% of a lot a money, but it's still only 15%. I guess a
big part of the reason to give up citizenship is not the tax, but also the
fact that he has strong roots outside the US to being with.

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ashconnor
30 years old. He'll have to do his National Service in the Singaporean army.

Edit: Correction. His children would be eligible.

Also, Singapore doesn't allow dual-citizenship, so he'll have to give up his
Brazilian citizenship (if he had it).

~~~
apendleton
The article doesn't say he's establishing citizenship in Singapore; just
residency. He presumably will remain a citizen of Brazil.

~~~
GFischer
Which also has military service (presumably obligatory, though in practice it
hasn't been so for some time)

<http://en.wikipedia.org/wiki/Military_service#Brazil>

"While de jure all males are required to serve, numerous exceptions mean
military service is de facto limited mostly to volunteers, with an average of
between 5 and 10% of those reporting for duty actually being inducted"

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bilbo0s
Immigrant who only sought US citizenship for financial gain, renounces US
citizenship for financial gain. This is not terribly surprising.

There is a subset of Immigrants that move to the US, not because they believe
in its ideals, but because it is financially advantageous for them to do so.
Sometimes it works for the benefit of the US... as in this case. Other
times... not so much.

On balance, I believe we generally gain more than we lose. Though I have no
data to back up that assertion.

~~~
bwb
Immigrants believe in American ideals more than most Americans. Esp when most
americans barely know anything about their own country. How many of us even
know the bill of rights by heart?

Just because one guy is making a financial decision doesn't mean you blame a
large group for some perceived lost of ideals.

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mike626
"Thanks for all the opportunity. Later, U.S.!"

------
urbanturbanguy
Does patriotism have anything to do with citizenship? or is the question of
acquiring citizenship becoming a function of your financial/carrer plan? (I
can see that in a lot of comments here. It is an easy logic too.)

In other words is "patriotism" or "nation state" a medieval concept that will,
over the next century, morph into the "market-value-ism" or "market-states"?
(In the hypothetical "market-value-ism": You will be able to enter exit &
participate in civic activities an any place based on the education/wealth
that you have &/or the corporation you are aligned with.)

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igorgue
I believe he would still keep is green card, I'm not sure though.

Also, if you worth more than 250K you can get in the US, and get a permanent
resident visa (green card).

The only 'benefits' [1] of being an US citizen is, the social security money
when you retire, and the right to vote.

With that being said, I'm about to start the process to become a citizen. I
think everyone should do it if they can, since, you don't know what's gonna
happen when we have an immigration hating president.

[1] Not sure if social security would have any funds when I, and Eduardo,
retire. And, I don't think voting counts in this country.

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blahedo
See also <http://news.ycombinator.com/item?id=3960000> .

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forinti
Brazilian law says that he should have lost his Brazilian citizenship for
voluntarily acquiring the US citizenship (which also requires that you
renounce all others).

But I guess with so much cash it won't be a problem.

~~~
_delirium
Both Brazil and the US have allowed dual citizenship for some years now, so
he's fine on that front.

~~~
syedkarim
The governments of the US might tolerate dual citizenship, or turn a blind eye
towards to it, but legally speaking, it's not allowed; you can have allegiance
to only the United States.

~~~
_delirium
Depends on what you mean by "legally speaking". The citizenship oath does
require allegiance to the United States, but unlike in some countries, there
is no law requiring naturalized citizens to renounce other citizenships as a
condition of naturalization. So both practically speaking and legally
speaking, dual citizenship is permitted.

------
planetguy
US citizenship is a nasty trap from which it is extremely difficult to escape.
The US is one of a _very_ small number of countries which will happily tax its
citizens on income earned overseas, thus causing them to pay double taxes on
everything they earn.

This has seriously bad consequences for US competitiveness, in particular:

1\. It discourages competent foreign citizens from seeking US citizenship (a
greencard is _so_ much better!)

2\. It discourages US workers from spending some of their careers overseas,
thus reinforcing US cultural insularity and giving competitive disadvantages.
Go to any interntional company's office in Singapore, Shanghai, Kuala Lumpur
and note that it's filled with Brits, Australians, New Zealanders with very
few Americans; this is why.

3\. And of course, things like this.

~~~
tallanvor
It does not discourage US workers from spending some of their careers
overseas. Most workers, even if working overseas, don't make enough that they
have to pay taxes on foreign earned income. --Between the deduction for money
earned overseas, deductions for housing, and other standard deductions, if you
earn enough that you're going to get taxed by the US, you earn enough that you
might as well pay an accountant to help further reduce your tax burden.

I don't buy #1 either, since most people don't get citizenship in a country
unless they plan on settling there.

~~~
steve-howard
It looks like you have to make over $150k/year to have to pay worldwide taxes:

[http://www.irs.gov/businesses/small/international/article/0,...](http://www.irs.gov/businesses/small/international/article/0,,id=97245,00.html)

It's not cool on principle, I suppose, but most people find it hard to
sympathize with the problems you face when you make more than $150k/year.

~~~
stevenwei
Just to clarify, your link refers to the income limits that qualify someone
for the exit tax (i.e. the tax that you have to pay the IRS upon giving up
your citizenship).

If you remain a U.S. citizen but choose to live abroad (i.e. pay taxes in
another country), you also have to pay income tax to the IRS, but you can
exclude the first $95,100 of your income from being taxed.

Source: www.irs.gov/businesses/small/international/article/0,,id=97130,00.html

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wilfra
He's going to regret this down the road. Yes taxing on Worldwide income is
absurd but not more absurd than giving up your right to live in the US. There
will come a day, probably not too far in the future, where being young and
rich on a tiny island isn't fun anymore and he's going to want to do something
with his life. He's going to be quite sad when doing it in the United States
is no longer an option.

~~~
darrhiggs
Singapore in not an island.

~~~
briandon
It's a state made up of 60+ islands. The largest is often called "Singapore
Island":

<http://en.wikipedia.org/wiki/Singapore#Geography>

<http://en.wikipedia.org/wiki/Geography_of_Singapore>

~~~
darrhiggs
So it's not _an_ island

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borski
The catch here is: good luck getting back in. The US gov't takes notice of
this stuff, and it's just good to be aware of the implications for if you ever
want to come back to the US. Not saying it's wrong or right (by all means, the
less tax the better), but it's important to be aware of the consequences.

