

Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO - jackfoxy
http://www.bloomberg.com/news/2012-05-11/facebook-co-founder-saverin-gives-up-u-s-citizenship-before-ipo.html

======
dtweney
My knee-jerk reaction is: What an ass. He comes here, gets an education, co-
founds a company, and gets rich from it. And yes, he's spending money and
creating jobs -- but he's also benefiting from the infrastructure, the
business climate, the population, and more. And when it comes time to pay his
tax bill, he skips out. Not cool.

~~~
vladd
It's legal to give up your citizenship - he plans to live in Singapore and he
must still pay the exit tax. This is what the law says and he doesn't break
it.

If you want to discuss this emotionally, try to see his point of view as well:
US is the only nation in the world (ok, maybe with 1-2 other exceptions from
Africa) where residency doesn't determine the tax authority you're subject to.
He plans to live and have his residency in Singapore and pay taxes there but
US would still like to have his tax money, who's the ass?

~~~
amalag
There are usually tax agreements with countries to avoid double taxation.

~~~
psykotic
The US is one of the few countries that doesn't allow its citizens to avoid
double taxation. You are still liable for US taxes on foreign-earned income
above $80,000 per year.

~~~
timbre
You can deduct taxes paid to your country of residence, so it's more max-
taxation than double-taxation.

~~~
haasted
I can confirm this.

Americans living in Denmark don't seem to worry too much about US tax. This is
due to the insane taxation level we have here, which blows all other levels
out of the water and makes calculating US tax very easy.

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9999
So let me get this straight: rich kid at Harvard gives his bright friend some
money to rent servers to run a service that gets popular. Rich kid doesn't
contribute any more. Rich kid gets cut out of company because he's not doing
shit any more, then sues the company. Company sucks it up and pays him off.
Then rich kid renounces citizenship and splits for a tax haven with all of
that money, completely avoiding contributing anything further to the
environment that made him billions of dollars.

And the popular narrative is that Zuckerberg is the asshole? Huh.

~~~
citricsquid
You're assuming he is leaving for tax purposes. If he doesn't live in the
United States why would he retain his citizenship? He could be denouncing it
for entirely unrelated reasons, someone stated below that to get citizenship
in Singapore you must be a citizen of _only_ Singapore. Nowhere has it been
confirmed, this is all speculation. He hasn't just suddenly "split", he left
the US almost 2 years ago. He already paid taxes on hundreds of millions, I
really doubt that he hasn't paid his "fair share".

~~~
gee_totes
If you are a US Citizen, you have to pay taxes, regardless of where you live,
so I am guessing taxes paid a role in his decision.

~~~
nsmartt
Would he also have to pay taxes in Singapore? If so, I can see how this move
would be acceptable.

Even if not, I don't think many would find this unacceptable if he had done
this before the mention of the IPO. It's possible that he has been considering
the move for a while, and hasn't bothered to go through with it until a
significant chunk of his income became at risk.

~~~
paulgb
I'm not a lawyer, but this seems plausible. Singapore doesn't have a
comprehensive tax treaty for the USA[1], which would otherwise prevent double
taxation.

[1] <http://www.iras.gov.sg/irasHome/page.aspx?id=812>

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guelo
Let's see, he's 30 so maybe he has 50 years to live. If he got $3.84 billion
and got a conservative 5% interest on that my back of the envelope calculation
says he could spend $115 million a year for the rest of his life. Now spending
$115 mill per year doesn't count buying assets like mansions or fancy art,
those are investments. It would be $115 million on apparel or personal
employees or the depreciation of cars, yachts and private jets. It would
actually be hard to do and take a lot of work to spend it all every year.

If he paid the american taxes, which are 15% for cap gains but let's say he
loses a third so he's left with $2.56 billion. He would be able to spend $77
million per year.

A $38 million per year difference seems like a lot of money, but is their any
difference between a $115 million a year lifestyle and a $77 million a year
lifestyle? In both cases you have more money than you can spend year in and
year out. You're really getting diminishing lifestyle returns the more money
you make. Maybe at the $115 mill level you'd feel more comfortable buying
another private jet or having an extra 100 personal employees to take care of
your stuff, but it really wouldn't be that much of a difference. I bet if he
had a talk with some older billionaires they would tell him that it's not
worth the hassle.

~~~
crazygringo
It is a huge difference, however, if you think: I could give that money to the
government, without any control over it, _or_ I could donate it to specific
charities, or even fund my own charitable organization, and have complete
control over how it was used.

I'm not necessarily saying that one is better than the other (private charity
might have the potential to be more effective, but is certainly less
democratic). But the choice is not merely between private hedonism and
government coffers. You can do good with money outside of taxes.

Plus, if it's invested in other companies (as one would assume it will be),
then it helps grow those companies, which if successful, will presumably pay
taxes themselves. I'm not arguing against capital-gains taxes in general, but
the question of _where_ taxes are collected along the chain is purely
practical, not moral. If Saverin isn't paying additional taxes now, it's not
like that money is disappearing forever.

~~~
ComputerGuru
If you give it to charity, you get to deduct that amount from the taxable
total, so that's an invalid point.

~~~
crazygringo
It's not the same thing at all. If you pay 20% in taxes, and we're considering
$1,000 of earnings, then I'm talking about paying $200 to charity instead of
paying $200 in taxes.

You're talking about paying the full $1,000 to charity to avoid $200 in taxes.
Totally different thing, and vastly more expensive.

Plus, his taxes are all in one year. To spend that kind of money effectively
on charity would take many, many years, so it's _still_ not a viable
alternative.

~~~
noahc
You could donate it to a charity, but they wouldnt have to spend it. This is
what gates and soros do. Its basically a charity that funds other charities as
they see fit.

A charitable trust with pretax dollars would be an even better idea however.

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hasker
I am not sure anyone noted yet that his Facebook earnings will fall entirely
under capital gains income, which only gets taxed at 15% in the United States
([http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United...](http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States)).
Singapore has ZERO capital gain tax, so he may be trying to avoid any tax
burden on this income. Still, 15% remain quite low (The go up a bit in 2013.),
and I suspect he would not have to pay it until actually selling his shares.
Some reports say he has already sold over half his stake, so I am not sure
this Singaporean move does that much for him.

There are plenty of ways to shelter money in the United States
([http://www.forbes.com/sites/deborahljacobs/2012/03/20/how-
fa...](http://www.forbes.com/sites/deborahljacobs/2012/03/20/how-facebook-
billionaires-dodge-mega-millions-in-taxes/)) and pay basically nothing.
Everyone here likes to make the tax burden on US citizens outside of the US
sound so horrendous, but my experience is that it is a worst of taxation
situation. One gets to exclude the first 95k of income from US, but I think
you also can run money through a housing allowance of around $100k depending
on the cost of living.

Yes, the US tax system sucks, but the weather and disney-like atmosphere in
Singapore suck more in my opinion. I think I could have fun living there for a
few years, but a lifetime would be hard. The US will definitely consider this
a move to avoid taxation. He will probably never be welcome again in the US,
and essentially becomes a pawn in international extradition should some US
administration in the future have a point to prove. If it were me, I would
just dump a ton of money behind Ron Paul.

------
underwater
The reaction of commenters who gleefully explain he may not be able to become
a citizen again is pretty amusing. What makes you think he wants to reapply?
Billions of people live fulfilling lives without ever stepping foot in the
United States.

~~~
Klinky
Well his bank account would probably be less fulfilled if he hadn't stepped
foot in the United States.

~~~
rubiety
This anecdote does nothing to detract from the central point, stated again:
"Billions of people live fulfilling lives without ever stepping foot in the
United States."

~~~
Klinky
How many billions and who defines "fulfilling"? Much of the world actually
lives in poverty.

It's also kind of a silly point to make when we're talking about a guy who
already set foot in the United States. Why did he come to the United States if
he was perfectly fulfilled in his home country where he was facing the threat
of being kidnapped? I think it's unlikely he'll want to visit again, but it's
not like his initial visit was really under what some would consider voluntary
circumstances.

------
lawnchair_larry
Good for him. I fully support higher taxes on the rich, but this notion that
the US can tax you anywhere in the world is downright offensive. He hasn't
been in the US since the company started, so I have trouble seeing a case for
him owing the US anything.

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antr
The tax reporting implications and liabilities of becoming US citizen are a
clear turnoff for many people. Cash is king.

~~~
andrewpi
Yep.. it's becoming increasingly hard to do any business with overseas banks
if you have US Citizenship. Foreign banks don't want the liability.

~~~
antr
Very good point. In Switzerland, if you have a US passport, it is pretty
difficult to open a bank account and/or get financial advice. Apparently
bank/advisors can get into trouble for reasons I am not well up to date.

~~~
acangiano
Yup. People with dual citizenship ("American" and "Swiss") living and working
in Switzerland, have a hard time opening a bank account due to their American
citizenship.

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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.

~~~
andrewpi
Apparently it depends on if you are deemed to have renounced US Citizenship
for tax purposes or for some other lawful reason:

"8 USC § 1182: (E) Former citizens who renounced citizenship to avoid taxation

Any alien who is a former citizen of the United States who officially
renounces United States citizenship and who is determined by the Attorney
General to have renounced United States citizenship for the purpose of
avoiding taxation by the United States is inadmissible."

~~~
mseebach
Judging from the statement he released, he's certainly aiming for a non-tax
reason.

If he did it for tax reasons, it would make a lot more sense for him to do it
pre-IPO announcement, or really as early as possible, as the amount of exit
tax he's liable for is based on an estimate of the value of his assets. As the
article mentions, it's easier to argue that number down when it's a private
company.

------
staunch
Just curious, how hard is it to regain US citizenship -- impossible?

~~~
rprasad
Essentially, yes. A person who renounces U.S. citizenship is generally not
able to take advantage of the special visa programs (like the EB5 investor
program) to regain residency. Furthermore, their applications for visas, etc.,
are also (informally) put in the lowest-priority bracket unless they pony up
to be placed in the priority queue.

Moreover, any attempt to renounce their renunciation of citizenship results in
a hefty tax bill for the period they were not a citizen, as the initial
renunciation will be treated (by the IRS) as an attempt to evade taxation.
Indeed, merely returning to the U.S. for a period of more than 183 days (one
of the tests for residence for taxation purposes) could trigger this result.
EDIT: Also note, as discussed below, he would be deemed "inadmissible" for re-
entry if he was deemed to have a tax avoidance motive for renouncing his
citizenship. The consequence would be a permanent ban from the U.S. (and the
hefty tax bill would remain intact).

~~~
CoffeeAndCoffee
A billion dollars is powerful. If he wants to; I'll bet that Saverin will find
a way to live in the U.S. again.

~~~
rprasad
I think you greatly overestimate how much power a billion dollars
provides...especially since the IRS would lay claim to that billion if he ever
tried to return to the U.S. Why would they work out a deal when they could get
their hands on the billion _and_ have an example for future tax evaders?

 _Note: I use the term tax evader in this context because if Saverin attempts
to return to the U.S. in the future (as a resident or citizen), it will be
clear that his renunciation of citizenship was primarily for the purpose of
evading taxes._

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cpt1138
I like hearing about sociopaths that utilize the infrastructure provided by
the U.S. but don't want to pay back. Contrast that to the evil poor that
utilize the infrastructure, have nothing but are demonized for not paying.

~~~
vidarh
If he'd actually continued to live in the US, I might have sympathy for this
argument. But he's moved out. The US tax regime where expat US citizens still
have to pay full tax to the US (except where there's a tax treaty that limits
double taxation) is exceptionally harsh - almost no other countries do that.

~~~
dons
> The US tax regime where expat US citizens still have to pay full tax to the
> US (except where there's a tax treaty that limits double taxation) is
> exceptionally harsh - almost no other countries do that.

This.

The US keeps taxing you _after you leave_. And for citizens, it is for life.

~~~
Splines
That's pretty hostile. I came here and now have a green card, with the
intention of eventually gaining citizenship.

Now I'm wondering how much I've harmed my future mobility (should I choose to
return to my birth country).

~~~
mhurron
Why do you want citizenship? What do you think it gives you over having the
Green Card. When I was going through the process to get my Green Card, my
lawyer pretty plainly said that unless I really wanted to vote, getting
citizenship gives you nothing but ads many liabilities.

The only real benefit I could have seen for myself was if I lived outside of
the US for more than six months of the year from time to time.

~~~
Splines
> _The only real benefit I could have seen for myself was if I lived outside
> of the US for more than six months of the year from time to time._

Pretty much this. Should I choose to move back home, it'd be nice not to have
to go through the whole green card process over again.

Maybe I'm hedging my bets too much.

------
andrewpi
Interesting that Saverin only became a US citizen in 1998.

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sbov
Given the exit tax, am I the only one who sees this as a risky move?

From what I can tell, he's going to have to pay 30% taxes on his unrealized
facebook gains. As opposed to 15% long term capital gains. Yeah, it's not
publicly traded so they can screw with the valuation, but how will the
government take that given liquidity is just around the corner? I'm not an
accountant, but this seems like type of scheme that fortunes are lost on.
Anyone else more informed have an opinion on the likelihood of him getting
screwed over this?

------
julieblakemore
Saverin's other business ventures make his renunciation of US Citizenship far
more palatable than many billionaires who jump ship for Monaco or some similar
tax-shield country

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andr3w321
This is becoming increasingly common in recent years.
[http://online.wsj.com/article/SB1000142405270230359240457736...](http://online.wsj.com/article/SB10001424052702303592404577362050670738024.html)
It's not just having to pay extra tax every year, the mere act of filing a
return abroad is headache enough and if you make a mistake you might see jail
time.

------
psychotik
Wikipedia says his middle initial is 'P', but the USCIS site says a Eduardo
Luiz Saverin renounces citizenship. Anyone know which is correct?

~~~
antr
Middle name is with "L":

[http://www.thecrimson.com/image/2005/2/24/connectu-
founders-...](http://www.thecrimson.com/image/2005/2/24/connectu-founders-
cameron-sh-winklevoss/)

------
philmcc
I wonder if the negative reaction to this is just a result of scale.

Most people I know do everything they can, both legally and questionably, in
order to minimize their tax liability.

(And they actually live in the United States.)

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onetwothreefour
This thread is full of misinformed, judgemental, jingoistic BS.

What this guy does is none of your business, and I don't think he gives a damn
what you think.

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josefonseca
Never heard of him here in Brazil. He probably gave up his Brazilian
citizenship as well.

I wouldn't be surprised though, taxes here are 3x those in the USA.

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jpdoctor
I predict the soon-to-be-enacted "International Tax Fairness" law, for which I
would say to congress: Whoosh.

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blahedo
See also <http://news.ycombinator.com/item?id=3960028> .

------
laic
So he does NOT support the Warren Buffet Rule?

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wissler
Saverin's case is potentially misleading. Many American citizens living abroad
are under great hardship caused by the US tax system following them around the
globe. The United States is the only developed country in the world that
harasses its citizens for taxes on wages earned in foreign jurisdictions.

E.g.: ""It makes absolutely no sense," said Senator Jim DeMint, Republican of
South Carolina, of a system that makes the United States the sole developed
country to tax income earned by its citizens abroad."

[http://www.nytimes.com/2008/04/01/world/americas/01iht-
expat...](http://www.nytimes.com/2008/04/01/world/americas/01iht-
expats.4.11594315.html)

~~~
9999
You can exclude $92,900 worth of foreign income from U.S. taxation (and
another $92,900 for your spouse).

~~~
wissler
So?

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nsoldiac
Guys, there is such as a thing as a US Visa for Foreign Investors:
[http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b...](http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=facb83453d4a3210VgnVCM100000b92ca60aRCRD&vgnextchannel=facb83453d4a3210VgnVCM100000b92ca60aRCRD)
He'll basically throw half a million at any cash-hungry startup and get a visa
in no time, that'll be pocket change for him in few months. Getting back into
the US will be no problem this dude. There's always the rafting option from
Cuba too :P (I'm going to hell lol).

~~~
rprasad
He is not eligible for that program (the EB5 visa), as a result of renouncing
his citizenship.

