Thursday, May 17, 2012
Sen. Schumer Proposes 30% Tax on Facebook Co-Founder, Others Who Renounce U.S. Citizenship for Tax Purposes
U.S. Senator Charles Schumer proposed legislation that would impose a 30% capital gains tax on people like Facebook co-founder Eduardo Saverin unless they show they didn’t renounce their U.S. citizenship to avoid taxes. News that Saverin, 30, the billionaire co-founder of Facebook had renounced his U.S. citizenship was reported earlier this month in advance of tomorrow’s initial public offering that now values the social network at as much as $104 billion. He will save at least $67 million in federal income taxes by dropping his citizenship, according to a Bloomberg analysis of the company’s stock price.
“Eduardo Saverin wants to de-friend the United States of America just to avoid paying taxes,” Schumer, a New York Democrat, told reporters today. “We aren’t going to let him get away with it.” Schumer’s proposal would empower the IRS to impose a 30% capital gains tax on future investment gains of wealthy individuals who the agency decides renounced their citizenship for tax-avoidance purposes. It also would bar such people from re-entering this country. He said he will move the legislation “as quickly as possible.” ...
Schumer’s proposal requires the IRS to determine whether individuals with a net worth of at least $2 million, or who have an average income-tax liability of at least $148,000, renounced their citizenship for tax-avoidance purposes. If the IRS determines that tax avoidance was a main reason for renouncing citizenship, that person “will be barred from any type of re-entry into the United States,” according to a summary of the legislation provided by Schumer’s office.
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Prior TaxProf Blog posts:
- Facebook Co-Founder Renounces U.S. Citizenship in Advance of IPO, Saving Millions in U.S. Taxes (May 11, 2012)
- Will Facebook Co-Founder's Renunciation of U.S. Citizenship Increase His U.S. Tax Bill? (May 12, 2012)
- Seto, Kleinbard Explain Tax Consequences of Facebook Co-Founder's Renunciation of U.S. Citizenship (May 13, 2012)
- Tax Savings From Facebook Co-Founder's Renunciation of U.S. Citizenship: $67 Million (May 16, 2012)