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.'"

Comments

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

[sl3xd]

Really? When was the last time you were in a housing project? Did you take ANY time to get to know the poor? Or are you making blanket assumptions based on lame and uninformed propaganda?

Your statement positively oozes contempt for people you quite obviously have no clue about. In my mind, anyone who sneers at a human being because of their poverty is worse than a card-carrying KKK neo-nazi. It's every bit as prejudiced as the belief that a person's color has anything to do with their character.

I spent years working with the poor; I spent more time in the projects than many of the residents. I took the time to get to know them as human beings.

In my experience, their situation has absolutely nothing to do with not wanting to work. I get so sick of hearing ignorant pricks say some lame line like "work at McDonalds." There is no unlimited supply of jobs available anywhere. The poor want jobs - badly. They want to work, and do so when they can.

But you know what? The kinds of hours they have to work isn't sustainable by the human body. The body inevitably breaks down from the strain, and they eventually cannot physically go to work. I've regularly seen people work to the point they pass out, after which they are fired. I know because I paid for college by working at such a job. Naturally, the corporation provides no health care coverage, so there is no treatment or physical therapy to get them back into the work force. Workman's comp? Are you joking? You haven't seen corporate america at work.

I'm convinced those who are constantly whining about 'the lazy poor' understand a lot less about economics than the teenage dropouts they demonize.

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:Requirements for Citizenship in Singapore

[Solandri]

In my experience, their situation has absolutely nothing to do with not wanting to work. I get so sick of hearing ignorant pricks say some lame line like "work at McDonalds." There is no unlimited supply of jobs available anywhere. The poor want jobs - badly. They want to work, and do so when they can.

I worked at and eventually became a manager at a company which hired predominantly low-income workers. I got to work with and talk with quite a few of them, as well as interview countless others. The poor run the full gamut. Some want badly to work (the hardest worker I've ever met was poor, and - I later learned - an illegal immigrant). Some are lazy bums who will slack off the moment they don't have any supervision (we had to let one guy go because he was too lazy to even show up for work most days - it took him three weeks to pick up his first and only paycheck despite us calling him every 2-3 days because he was too lazy to drop by).

On average I would say the poor have a weaker work ethic and are harder to manage than middle- and upper-class folks. They are enthusiastic when they talk, and the first few days at work. But as the weeks wear on, their performance starts to drop. You have to micromanage them more (on average). That's partly what keeps them poor. Many of them also suffer from circumstances outside their control which keeps them down - severe allergies, an uncontrollable temper, physical handicaps which limits their ability to get manual labor jobs, kids and the inability to find babysitters, a criminal record from some stupid mistakes fresh out of high school, etc.

So on average I'd say GP is slightly correct. But the poor run the full gamut and it's horribly unfair to pre-judge them all based on the average. You really do have to get to know each individual and their quirks. If they have a good work ethic but are held back by circumstances, once you get to know them you can often match them up with jobs which minimize the impact of their impediment. e.g. The guy who had a bad temper loved animals, so we had him tending horses. He absolutely loved that, and it reduced his contact with other workers thus minimizing opportunity for his temper to become a problem. And many of the younger ones with a poor work ethic can be turned around with some good management and encouragement.

Your statement positively oozes contempt for people you quite obviously have no clue about. In my mind, anyone who sneers at a human being because of their poverty is worse than a card-carrying KKK neo-nazi. It's every bit as prejudiced as the belief that a person's color has anything to do with their character.

Given Slashdot's political leanings, I'd point out that the exact same thing is true for rich people. You shouldn't sneer at a human being because of their wealth either. Most of the wealthy people and especially the few millionaires I know are some of the hardest working people I've ever met.

It's wrong to assume poor people are lazy, and it's wrong to assume rich people are undeserving fat cats who simply take advantage of others. You really do need to avoid these prejudices and get to know each person individually.

Re:Requirements for Citizenship in Singapore

[sydneyfong]

The government of Singapore builds flats for its people not because the government of Singapore likes to, but it had to

Tell that to people like us who live in Hong Kong. Honestly we're dying to have that kind of government "subsidy" (even if the government there makes money from it).

Geographically Hong Kong is pretty much like Singapore -- limited land mass, large population, and basically an "island state" by being administratively separated from mainland China.

Here, the government basically colludes with property developers to push up the price of housing beyond the means of the average citizen. Government officials routinely retire to become a "consultant" of land developers. The economic policy of the current administration is to keep the economy afloat by producing and maintaining a massive housing bubble.

The government terminated their subsidized housing program about a decade ago, basically because the property developers and speculators were "not earning enough" or that they'd been badly burnt by the housing bubble of 1997 (of course they'd never admit to this). Instead of allowing the average citizen to get a share of the pie when property prices are high, the government and the large property developers are reaping all the profits and all we get are unaffordable housing at inflated price that is basically shit. Heck, I come from a relatively wealthy family living in an apartment with a market price of USD$1million+, but honestly you probably wouldn't want to live in my home.

And what does the government say in response to these hardships (that they artificially created by restricting the use of land)? "Just work harder, you'll be rich someday" or "the purpose in life is not to buy an apartment", that sort of crap (yes, that's what they really say, literally).

In reality, people are forced to rent "beds" (not apartments, not rooms) for exorbitant prices. "How many poor Hong Kong people can you fit into a tiny apartment?" The answer could surprise you. I think a hundred miles north in some foxxconn factory the living conditions are probably better (I'm not kidding).

I'm "lucky" to have a room of my own with a bed and a desk. That's what you call luxury around the area.

*Still* think the Singaporean government had to build houses? The puppets in our government beg to differ. You'd be surprised how much of a shitty job they can get away with. Singapore, for all its anal restrictions about free speech and chewing bubble gum, are actually doing more than is "necessary" in welfare.

(Sorry for the rant.)

Re:Good for him

[Anonymous Coward]

Yeah... a guy who created a giant marketing scam based on US laws and protections, and is now dodging taxes. Wonderful. You Ayn Randians can have 'em.

Wimp

[Greyfox]

He should have had his heart stopped prior to the IPO and restarted thereafter! That's right! I'm suggesting that he should have spent the IPO dead! For tax purposes! What a glorious dodge that would have been! Renouncing your citizenship... Pfft!

Of course, now that I think about it, he might have had to spend an entire year dead to realize any tax benefit from it. I'm sure you could manage that sort of thing when you're worth a few billion dollars!

Re:Wimp

[outsider007]

It's the same dodge Walt Disney's been up to.

Re:Unfair taxes !

[Anonymous Coward]

Actually the tax is quite low - 50 years ago, the tax was a lot higher.

Re:Unfair taxes !

[scottbomb]

And too many people don't understand that the government has no money of it's own. It must confiscate it from the citizenry.

The fabled Robin Hood is often mis-characterized. He wasn't robbing the rich to give to the poor. He was robbing the government (Sheriff of Nottingham) to give the people back their own tax money the Sheriff mercilessly demanded by force.

Re:Unfair taxes !

[J'raxis]

I'd tackle the discretionary spending in the defense budget first. The government is spending $666.2 BILLION there, as opposed to $80.6 billion on "health and human services" of which welfare is a part. Source.

If we reduced the U.S. Government (as a whole, not just defense) to the size it was in the 1990s you could do away with the income tax completely. Source. And think of how big the government was in the 1990s. What taxes could we eliminate if we reduced the government to the size it was before LBJ's "Great Society" (1965), the "New Deal" (1933), or even the income tax itself (1913)?

Re:Good for him

[ohnocitizen]

Let's just shut down schools, hospitals, and such. The market will provide. I can't wait to go to the Disney Exxon-Mobile ER and pay a fair market price of $5,000 for a visit that formerly cost $75. The security I will feel knowing that the fire department (which will only exist in communities with enough fires to provide demand) will automatically debit my bank account when they come service a fire in my building.

Ayn Rand was a hypocritical fool who shunned the very value of society only to feed off it in her own time of need.

"Going Galt" is a breaking of the social contract after having benefited from it, and deserves no more admiration than that afforded the bully who steals your lunch money to sneak out and stuff his face with McDonalds.

Good Ridance To Him

[cmholm]

Fixed that for you. What would have been really cool is instead of his dad shipping Eduardo to Miami for safeties sake, the boy got his education old school, getting kidnapped for ransom and/or knifed outside a club in Sao Paulo. But no, he got a respite while raking in some unearned income in Brazil from the safety of FL. Next, he won the lottery when one of his few friends at Harvard needed some start up money for a social networking idea.

Now, he flips the bird to the country that gave him the safety, and an environment to make a major move up the SE ladder, because it's all his HIS! Well, screw 'em, and put 'em on a no-fly list as an ingrate of the First Degree, Order of the Asshole.

Frankly, we're not losing much when the likes of him take off: one of many sociopathic money grubbers constantly looking to game the financial system (privatize the profits, socialize the loses), and whose investments know no border no matter where they've bought a condo. If he participates in fucking the banks in Singapore like his kind did in the US, he'll end up in gaol faster than he can whine "class warfare".

Re:Good Ridance To Him

[0111 1110]

and put 'em on a no-fly list

You sir are a true American. The New American. When the rest of the world thinks of Americans you are the kind of person they are thinking of.

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

Civil Society feeds Entrepreneurship

[CohibaVancouver]

What a lot of anti-tax folks don't realize (or choose to ignore) is the fact that a tax regime that creates a civil society (educated, healthy populous, rule of law) in turn creates an environment that allows companies like Facebook to flourish. It's much harder to create wealth in an environment where your employees are illiterate, hungry and sick and corruption is rampant. Sure, you can drill oil wells or mine for gold, but you can't really create companies with IP in those environments. I guarantee you the next Apple or Google is not coming in Nigeria. Why do you think India is working so hard to create institutional change?

Re:Good for him

[Anonymous Coward]

"I can't wait to go to the Disney Exxon-Mobile ER and pay a fair market price of $5,000 for a visit that formerly cost $75."

Are you sure it would work out that way? You might plot the price of lasik and related eye surgeries over the last 20 years to see what less-regulated market might do.

Re:Good riddance indeed

[Trepidity]

There's a difference between opposing the actions of your country, playing corporate tax games, trying to change things, and a whole range of other activity, and--- explicitly renouncing your nation. Bill Gates has never held up his right hand and under oath renounced America. Most Americans wouldn't either, not even very wealthy, very libertarian ones.

I suspect Saverin had no such compunctions because he never really considered himself American in the first place. So to him being in the U.S. for a few years was just a bit of a game, a chance to make a quick buck; he had no loyalty to the country, despite the oath he took. So it was just as easy to recite an empty renunciation as to recite his empty oath of citizenship, all just an accounting game.

Re:sucks for his kids

[csumpi]

Did you mean:

How horrible is the Singapore military for the son of a billionaire?

Re:Good riddance indeed

[0111 1110]

You're just jealous. What is a "good" American anyway? Someone who is pro Police State, likes police brutality and an official policy of sexually assaulting all children who wish to travel by air? America certainly doesn't stand for liberty anymore. The last time the majority of Americans were Libertarian was back when horses and gas lanterns were high tech.

Aside from violence, stupidity, ignorance, and cruelty, America doesn't stand for very much anymore. Those of us who have spent time living abroad often find ourselves ashamed to admit our nationality. I've often been told that I "seem nice for an American". That's the kind of country we are now. Our country used to stand for something. A philosophy. An ideal. Sort of like Soviet Russia or Cuba. Now we don't stand for anything except brutish ignorance and violence and maybe fascism. When people think of America they think of Abu Ghraib and Guantanamo. Of senseless sadism and torture for its own sake. I think you'd be surprised at the number of people who would jump at the chance to change their nationality from American to something else regardless of their tax bracket. Singapore is a sort of semi-benevolent dictatorship, but in many ways it's a nicer place to live than the U.S.

Re:Trendsetting

[Anonymous Coward]

A place where you can start your own business without getting sued into the ground by established interests who've bought politicians?

Re:Good riddance indeed

[Trepidity]

I live abroad too, in a lot more enlightened place than Singapore, and yet I haven't renounced my American citizenship for a quick buck.

If he had changed his citizenship for some kind of moral reasons, that's legitimate. If it's just for money, that's beneath contempt.

Re:Unfair taxes !

[Anonymous Coward]

Or maybe....the income tax started out as a tax on the wealthy, who didn't like it, but who needed large government services--like, say, a large global military presence to protect their overseas investments. (You don't think our military is spread all over the world because we feel like it, do you?)

Maybe those same people who BUY AND PAY FOR LAWS managed, over the course of a few decades, to get the laws shifted so that the tax burden now falls on working people instead of the wealthy, who benefit the most from very expensive things like armed ships, planes, and troops protecting their assets, lavish and ever expanding international airports, transcontinental transportation systems, diplomatic missions that seem rather preoccupied with protecting the rights of wealthy corporations and individuals overseas, an educated workforce, police to keep the educated workforce in line and compliant, and of course a huge spying apparatus that most likely illegally snoops on US citizens looking for people with wrong thoughts and almost certainly is engaged in industrial espionage on a massive scale?

Kinda depends on how you look at it, huh?

Re:Good for him

[jenningsthecat]

Please show me where I consented to this contract.

Your parents consented to it for you when they either gave birth to you in the US or brought you here. Presumably you are now of legal age. If you wish to no longer be bound by that contract, I suggest you leave the country, forfeit the priveleges of the civilized society that has already given you countless advantages and protections without which you would likely be destitute or dead, and find some place else in the world to hang out with other 'rugged individualists'. Good luck with that.

PS I used to be a Randroid too, and once upon a time I would have agreed with you. Then I grew up, attained some sophistication, discovered empathy, and got a clue.

Re:Unfair taxes !

[artor3]

Of course, back then, you worked till the day you died, since there was no Social Security. And that would be quite soon if you got sick and didn't happen to be wealthy, since there was no Medicare or Medicaid. And let's not forget that there were no food stamps or WIC checks, so if you were poor, you were liable to starve. That is, if you didn't rob or kill to get your food.

And there were no battered women shelters, or protections of any sort for abuse victims. And there were no regulations to stop companies from dumping all sorts of nasty shit into your air or water, or outright putting it into your food as filler. And of course your employer could force you to work 12 hours a day, with no weekends, and no overtime -- not that it mattered, since they could also pay you in scrip which was only good in the company store.

I don't see why you glorify that time period. The workers of the time hated it so much that they fought like hell to get us unions and social safety nets. Why are you so eager to throw away everything they worked for?

I'll tell you what. If you don't like paying to live in a civilized society, then you are welcome to get the fuck out. We'll be better off without you.

Re:Unfair taxes !

[PyroMosh]

So renounce your citizenship and go elsewhere.

By remaining, you are implicitly saying that you can live with this system, or that it is at least better than any other alternatives.

I don't agree with how every cent of my taxes are spent, but that's what comes with representative democracy.

The benefits I net (security, social safety nets, police, fire, EMS, food inspectors, FAA, etc., etc.) far outweigh the things I don't like ("elective" war, eleven carrier groups, corn subsidies, etc.).

Nobody is compelling you to stay.

Re:Unfair taxes !

[TheRealMindChild]

But apart from the sanitation, the medicine, education, viticulture, public order, irrigation, roads, the fresh-water system, and public health, what have the Romans ever done for us?

Re:Good riddance indeed

[MachDelta]

Considering America is the spiritual home of "money = moral", I'd say he's doing exactly what the country taught him...

Re:When they say they're only going to tax the ric

[artor3]

Implement a 90% exit tax. Problem solved. If you really hate the country, you're free to leave. But if you're only leaving because you've received the benefits of living here and now want to skip out on the check, well fuck you.

Re:Try some numbers...

[J'raxis]

Federal spending in 1990 was $1.1 trilion. Source. Federal spending is currently $3.8 trillion. Source. These figures are a combination of "discretionary" and "mandatory" spending.

The individual income tax for this year is $1.359 trillion, and the corporate is $0.358 trillion. Source.

( 1.359 + 0.348 ) / 3.809 = 0.449 = 44.9%

If you remove the $1.707 trillion that represents the income tax from the total Federal revenues of $2.902 trillion, you are left with $1.195 trillion of revenues. $1.195 trillion is bigger than $1.1 trillion, hence current federal revenues, minus the income tax, could pay for the 1990 budget.

Ron Paul states that:

I want to abolish the income tax, but I don't want to replace it with anything. About 45 percent of all federal revenue comes from the personal income tax. That means that about 55 percent -- over half of all revenue -- comes from other sources, like excise taxes, fees, and corporate taxes.

We could eliminate the income tax, replace it with nothing, and still fund the same level of big government we had in the late 1990s. We don't need to "replace" the income tax at all.

Ron Paul is telling the truth. His 45% figure is accurate; his assertion that current Federal revenues sans income tax could pay for the 1990 budget, is accurate. You, however, are trying to confound the issue by bringing up irrelevant statistics, conflating statements I made with Ron Paul's statements, and outright lying when you say that Paul is doing so.

Re:Unfair taxes !

[J'raxis]

This is mostly correct, although there are plenty of wealthy people out there that don't become such parasites.

Not understanding this is one of the reasons why no amount of government interventionism ever seems to help the poor or middle class in the long run. The wealthy parasites in and behind government (bankers, financiers, and similar assorted rent-seekers---all non-productive types) steal from the poor and middle class. When the people finally get sick of it, their anger and envy is directed toward "the rich"---which inevitably falls on the productive rich (entrepreneurs, businessmen, upper middle class), not the parasites who are truly responsible for the mess.

New laws are passed, new regulations are created, taxes are increased---all of which impact the poor, the middle class, the small businessmen, and other productive people. The parasites already know how to work around such laws and taxes because they wrote them---and wrote in the loopholes! So the end result is more people are pushed down into poverty while the parasites get richer.

Re:One arguement against taxing rich people

[Nimey]

No, (immoral) rich people will hire accountants and lobbyists so they can pay the absolute minimum.

They'll stick around and use society's benefits while not wanting to pay for them.

Re:Unfair taxes !

[artor3]

We were still in building-a-superpower mode long after the institution of the income tax and the New Deal, and probably even after the Great Society. The downfall didn't start until the 80s, with its massive tax cuts, deregulation, explosion of Wall Street gambling, and culture of greed. Yes, all that stuff probably made us a bit richer in the short term, and it made some people a lot richer. But in the long run, it's destabilized the markets and encouraged businesses to focus on quarterly profits at the expense of long term planning.

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.

Re:Try some numbers...

[artor3]

Inflation's a bitch.

Your 1990 budget is spending 1990 dollars. Your 2012 budget and income tax figures are in 2012 dollars. Adjust for inflation, and federal spending in 1990 was closer to $2 trillion.

From that point on, your math all falls apart.

Re:Not a very graceful move

[Cimexus]

It's not necessarily always people trying to make a quick buck.

My wife is American but hasn't lived there since we were married (which was quite a while ago). She is considering giving up her US citizenship because once she makes more than a certain amount per year, she no longer falls under the foreign-earned income exemption and can actually end up getting double taxed (i.e. she pays her full local income tax, and then also has to pay income tax to the US on whatever she earns above the foreign-earned exemption limit. That is ridiculous, I'm sorry. Why would we do that if we didn't have to?

America is the only country I know of (there may be some others, but not that I've come across) that tax you based on your citizenship, rather than your residency. If you're a US citizen, you have to file a tax return and potentially pay tax, even if you've not set foot inside the country in 50 years and have no financial affairs there whatsoever. That needs to change if they want to stop people randomly giving up citizenship for financial reasons.