and probably pays good money for it -> http://www.admissions.college.harvard.edu/financial_aid/cost...
service rendered and paid for, he doesn't owe you anything, wtf do you want?!
> he's also benefiting from the infrastructure, the business climate, the population, and more
i don't know his story, but if he grew up in the US, his parents probably worked there and paid taxes like everyone else that paid for those things.
also, there are other countries that have that kind of infrastructure, business climate, etc. give or take a bit of quality here and there. some of them have less regulatory capture, thus are both more effective and more efficient, and thus can provide equal or better services for less taxes.
it's completely legal to leave for greener pastures if you can, that's why freedom is a good thing. your faux moral argument smacks of either envy or socialism, can't quite decide which.
listen, the state doesn't have a "moral right" on your money, energy, or time. first, you're born somewhere but then you basically make a deal. most people enter this deal implicitly, but it's still a deal, it's got nothing to do with morality or ethics.
But he didn't, he built and founded facebook here, and this is where he should pay his debt. He benefitted from the climate on THESE pastures, and the cost of doing so should be paid.
Of course it does. Without the state, there would be no property rights.
I know this sounds incredibly pedantic, but feel it's important to make the clarification.
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?
That said... if I wanted to present a highly sympathetic portrait of someone renouncing US citizenship because of the unusual policy of taxing citizens overseas, this isn't the case I'd pick.
I believe that Saverin benefitted tremendously from being in the US, as a US citizen, and that his earnings (ie., proceeds from the IPO) are a direct result of having been in the US for this time. When you work at a startup, you are essentially working for the prospect of future earnings (in a way, it's a form of deferred earnings, except of course it's highly unpredictable). He has found a clever way to be a US citizen while his earnings are unrealized, but not a US citizen once they are.
This is very different from the case where a person earning a salary in the US moves overseas and lives and earns a salary as a resident of a different country.
By the way, I've never read a real defense of the unusual policy of taxing US citizens who live abroad, and I am a little worried I'm overlooking something here. Does anyone know what the justification for this is? Or why it's justifiable for the US but not (essentially) every other country?
Just google "US Citizen Freed" and you will find countless examples of US Gov intervention and protection that simply cannot be bought.
He is now a much, much better kidnapping target since he is one of just a few non US citizens with over a Billion dollars who has no real protection. Do you think Singapore can protect him? His lawyer just made a huge fee and looks smart but gave up his clients relatively inexpensive protection.
I just don't get it.
I bet this homeless guy was super-glad to be a US citizen too: http://reason.com/blog/2012/05/08/the-da-just-released-surve...
> Do you think Singapore can protect him?
They could, if they wanted to. Just like the US could if it wanted to.
But he's probably better off just buying protection by himself, or not flaunting his riches.
Somewhat interesting, considering his parents fled to the US because gangs in Brazil had him on a "to-kidnap-list". If anyone were aware of the problem I'd think he would be.
He obviously has different priorities.
I see this as different from someone going over to England, working, opening an account, making investments, and discovering that they owe (or at least have to file) with the US.
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.
Some people conclude that those who collaborate with the federal government are evil and therefore deserving of arbitrarily bad treatment, and that's what gets you terrorists and violent anarchists and so on. Also, one looks in vain for the government which always behaves ethically and can be relied upon to continue doing so which one ought to be supporting instead.
But then, I remember he's getting nothing for free here. He's giving up his citizenship. Under the current economic/political climate, that may be something that looks easy to do on a whim ("The US is going to lose superpower status! Who cares!"), but this is a big, big thing. You lose all rights to live and work in the US, and can't ever get this back.
And the popular narrative is that Zuckerberg is the asshole? Huh.
Taxes probably played a role in the decision, but it could easily have been a minor one rather than just "split[ting] for a tax haven".
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.
A 15% long-term capital gains tax rate on $3.84B (4% of Facebook),
He saved $576 Million by giving up his citizenship and moving to Singapore.
Not sure what Zuckerberg has to do with this story, so bringing him into the discussion seems like a red herring. Whether Zuckerberg is a good guy is a separate question; maybe Saverin and Zuckerberg are both assholes (or maybe neither).
Not terribly different from Seed/VC funding.
Also, popular narrative is "Steve Jobs is an asshole." Popular narrative also wonders who this Mark Zuckerburg fellow is. Does he sell hard candies?
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.
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.
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.
A charitable trust with pretax dollars would be an even better idea however.
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.
There are plenty of ways to shelter money in the United States (http://www.forbes.com/sites/deborahljacobs/2012/03/20/how-fa...) 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.
"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."
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.
I am sure Eduardo will be all set. He will be back in the U.S. and will avoid $1-$2B in taxes.
There literally is a point where you can't spend the money fast enough (on objects for personal use) to lose it. You can lose it doing dumb things in financial markets or with a business, but if you have $3 billion dollars it is impossible to spend it fast enough to lose it. You can burn $40 million down to see (see: most musicians and athletes), but not $3 billion.
Even earning 2% interest on 3 Billion (i.e. Treasury bonds or something nearly risk-free), you can make $165,000 A DAY.
So buy 3 cars today, and tomorrow, and the day after that, and the day after that. You just can't do it.
So whats the difference between $2 billion and $3 billion? Not all that much. (And I don't believe he is avoiding a billion dollar tax bill, he still has to pay some level of exit tax).
But the difference between being able to come to the US and not coming to the US is significant. What if he wants to go to a movie premiere in LA, or skiing with friends in Aspen, or going to Warren Buffet's annual investors meeting, or seeing a VC in Silicon Valley? You can shop anywhere, you can vacation anywhere, and you can eat anywhere. But some events only happen in one country or another. Some partnerships only happen in one country or another.
That's obviously assuming the IRS decided he renounced his citizenship for tax reasons and he is banned from the US.
So, if the US government cares, this person could be denied entrance to the US.
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).
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.
The US keeps taxing you after you leave. And for citizens, it is for life.
Now I'm wondering how much I've harmed my future mobility (should I choose to return to my birth country).
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.
He paid for college. He paid for taxes while he was using the infrastructure you've mentioned. Now he's going to greener pastures and you still expect him to continue to support the U.S. through taxes? I don't think that makes a whole lot of sense. I don't continue to pay college tuition because at some point that "infrastructure" helped me land a job. I paid that debt off, and it's behind me.
I don't want to turn this into a political discussion, but this is why I disagree with people suggesting that the U.S. will fix its problems by increasing the taxes on the rich. The rich will leave- the U.S. doesn't offer anything that other countries in the world can't, and at a cheaper cost.
given the number of high qualified jobs Facebook has created, the taxes that both FB and employees are paying, and Facebook's continued support towards the startup ecosystem, calling ES a sociopath is simply wrong.
1. In the clinical sense it's hardly reasonable to infer that he is; the parent poster was being hyperbolic.
Maybe our 3rd world quality public educational system? He didn't attend a public high school or college.
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?
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.)
What this guy does is none of your business, and I don't think he gives a damn what you think.
I wouldn't be surprised though, taxes here are 3x those in the USA.
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."