Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO

parallel_prankster writes "Bloomberg reports that Eduardo Saverin, the billionaire co- founder of Facebook, has renounced his U.S. citizenship before an initial public offering that values the social network at as much as $96 billion, a move that may reduce his tax bill. From the article: 'Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history for an Internet company. Saverin's stake is about 4 percent, according to the website Who Owns Facebook. At the high end of the IPO valuation, that would be worth about $3.84 billion. Saverin, 30, joins a growing number of people giving up U.S. citizenship, a move that can trim their tax liabilities in that country. Saverin won't escape all U.S. taxes. Americans who give up their citizenship owe what is effectively an exit tax on the capital gains from their stock holdings, even if they don't sell the shares, said Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan's law school. For tax purposes, the IRS treats the stock as if it has been sold.'"

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Requirements for Citizenship in Singapore

[bobwrit]

Just to provide a little bit more information to this story, here are the requirements for citizenship in Singapore: http://www.ica.gov.sg/page.aspx?pageid=132

Re:Requirements for Citizenship in Singapore

[Anonymous Coward]

Um, Singapore has a massive welfare program, even though the conventional wisdom (even there!) is that it's all free market.

First all, over 80% of all housing in Singapore is government housing. They build it, then sell it at below market rates (significantly below market rate) to families. This is a massive redistribution of wealth. After 5 years you can sell your gov't condo on the free market and make a bundle (millions in too many cases to count).

All Singaporeans are required to contribute 36% of their income to the Central Provident Fund. They use this for retirement, healthcare expenses, and purchasing homes. What people don't realize is that there are massive gov't subsidies into the healthcare system which to help people pay for healthcare. A poor Singaporean may only be paying 20% of their healthcare expenses out of their CPF account, with the gov't kicking in 80%. Yet everyone is still convinced that it's 100% free market. Same thing happens with housing. You can use your CPF fund to buy housing, but the gov't will also kick in $50k+. That's another massive redistribution of wealth.

Singapore has a massive welfare state. It's just doesn't seem like it because their redistribution model is different than that used in the USA and Europe, and there's less poverty because the economy does so well (thanks in no small part to drawing in rich billionaires, which jack up property prices, which inures to your average Singaporean because of the gov'ts housing policies).

Re:Good riddance indeed

[chill]

You don't see real American rich people renouncing citizenship.

Actually, the number was way up in 2011. A total of 1,780. It may not seem like a lot, but in 2008 it was 235.

http://www.bloomberg.com/news/2012-05-01/wealthy-americans-queue-to-give-up-passports-in-swiss-capital.html

That's because it isn't usually done

[Sycraft-fu]

The US makes it very easy to keep a US citizenship. To renounce it you have to do so in front of a US consular officer, and with the full intent of renouncing your citizenship. Any other way isn't valid. So if another country as part of their immigration process say "Give us your passport and say you renounce your US citizenship," you can do so and it doesn't matter. You can go to the US embassy and get a new passport later. The US doesn't consider their ceremony valid, they consider you still a citizen. Of course when it comes to US citizenship, the only opinion that matters is that of the US.

Also other than taxes, there aren't really any burdens of staying a US citizen. They don't require you to show up twice a year to praise the president or something. You can have the citizenship and it is just something you have. Taxes also aren't a problem, if you aren't trying to get out of them. If you live in another country, work there, and pay taxes there, you are fine. The US is a-ok with that, they don't want a cut.

They only go after taxes when people are clearly trying to dodge taxes that they'd otherwise owe. They don't want rich people to make a ton of money in the US but technically live in Barbados and not pay any taxes.

So really the only reason to formally and actually renounce a Us citizenship are:

1) If a country you are immigrating to actually makes you do it properly, to a US council. Of course even then who knows because that would be done in the presence of the US council and they might decide it was bullshit since you were forced.

2) If you really dislike the US so much that as a statement or personal moral matter you just can't keep your citizenship. Fair enough, but of course then you'd better be sure.

3) To evade taxes. In that case, fuck you.

Otherwise, people keep it. My parents moved to Canada like 5 years ago. Mom is from there, so Canadian of course, but got her US citizenship when she lived here. Dad was born in the US, and recently got his citizenship up in Canada. Neither renounced their US citizenship and neither are going to. Why would they? Nor a I renouncing my Canadian citizenship, though I live in the US. I can keep both and it is no big deal.

Re:That's because it isn't usually done

[bkmoore]

If you are a U.S. citizen who lives and works in a foreign country, you are required to file a Form 2555 with your federal income tax return. You only claim income after foreign taxes. The exclusion for single filers is $92,900 in 2011, for married couples it is around 190,000. There are additional deductions for housing expenses, etc. Then you get the standard deductions for yourself and dependents. In my case, I would need to be pulling in well over 200K after foreign taxes per year to owe the IRS. Most normal Americans who work in foreign countries probably won't owe the IRS any taxes.

Another thing to consider, is if you renounce your citizenship it will not be possible to return to live in the U.S. If it's about saving some money on a tax bill now, it's probably short sighted. Make sure the country you have chosen to immigrate to respects individual property rights. If they don't, you might end up getting disenfranchised after the next popular revolution and don't expect the U.S. to be any help. Most countries that do respect individual property rights, e.g. western Europe, Australia, Canada, etc. have equivalent or higher tax rates than the U.S.