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.
- ABC News
- CBS News
- Fox News
- New York Post
- Wall Street Journal
- Washington Post
- WSJ Deal Journal
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)
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Here's a practical way to raise enough tax revenue to balance the federal budget.
Step One: Impose an excise tax on inane public statements by legislators.
Step Two: Get Senator Schumer in the same room as a microphone.
Step Three: Watch the tax receipts roll in.
Posted by: Jake | May 17, 2012 9:05:42 PM
If only he was half as interested in real financial regulation as scoring cheap political points off of the scandal du jour...
Posted by: Anon | May 17, 2012 9:33:00 PM
Of course, even expats like Saverin have to pay taxes in the US when they own shares in public companies ... Unless they own shares in those companies that pay no taxes on offshore income ...
Posted by: Nemo | May 18, 2012 2:55:11 AM
Then let's hunt them down with drones!
After all, if they would cleanse themselves of the stigmata of US citizenship and thereby escape a lifetime of vassalage to Uncle Snoopy and his minions, they must henceforth be regarded as potential enemies - ferae naturae - and thus fair game.
Land of the free, indeed.
Posted by: Iquit | May 18, 2012 5:39:28 AM
Schumer's proposal has been called an "economic Berlin wall."
Posted by: Woody | May 18, 2012 7:51:43 AM
Isn't that a bill of attainder? Not that the Dems seem too concerned about the Constitution, but you'd think anyone who was awake in civics class would remember that you can't make laws like this.
Posted by: Stacy | May 18, 2012 12:24:42 PM