Facebook Co-Founder “De-Friends” America
Update 2015: Record number of citizens are renouncing their US citizenship. This requires one first become a dual citizen, and obtain an alternative passport. Many different politicians and entrepreneurs have multiple passports and offshore companies. You can see more at Second Passport Flag
Eduardo Saverin, Co-Founder of Facebook has officially renounced his US Citizenship, just a short time before Facebook IPO – which will likely land him billions of dollars in profit, and would have resulted in millions of dollars of capital gains taxes.
The Former American was born in Brazil, received US citizenship, and attended Harvard where he met then a fellow student and now Facebook CEO, Mark Zuckerberg.
Eduardo’s name appeared on the list of Ex-pats who have officially renounced their U.S. citizenship.
Many view Eduardo’s “switch” as strategic because it will decrease the amount of his American Tax obligation he will owe (or would have owed) on the estimated $4 billion he is expected to make when Facebook goes public.
Eduardo made the decision to finally cut the shackles from the US tax obligation when he traded his US citizenship for a passport which comes with a much greater tax proposition: Singapore.
Tech Crunch breaks down in pretty good detail how Eduardo went down. But the true gem to take away are the reader comments on the story on Tech Crunch.
They display the majority mentality that the wealth of a few should be redistributed to the masses by the government. Not only that, many readers pass judgement on this one man’s personal decision on where he wants to live his life. It’s simply amazing to read the knee-jerk reactions from the American citizens responding to a man’s personal decision to renounce his citizenship. You can just feel the underlying resentment from people stuck in a scarcity mentality, jealous of another man’s accomplishments and wealth.
John Rampton from Palo Alto, California had this to say:
Damnit, I hate this kid… Right place at the right time, looks like he’s still doing the same.
My response is that John is clearly coming from a place of jealousy. If the entire world benefits from your product or service, it can’t be written off as “luck”. Facebook makes a ton of money as a direct reflection of the value they provide (depth) and the number of users they provide it to (width).
Personally, I don’t use Facebook because I find it to be largely an infringement on my privacy rights, but I’m still sympathetic that the capitalistic facts: Facebook present an enormous amount of value to a sizeable percentage of the world population. And the founders deserve to be adequately compensated for the value they have provided to society. Others also attack his character, passing moral judgement on his decision.
Paul Aubert, a Regional Sales Manager at Hy-Lok USA says: Disgusting! When a billionaire will go to such lengths to avoid taxes, what can we assume about their character? Greed is a disease and the cure is mandatory tax rates.
Mandatory tax rates? Since when is tax voluntary? Furthermore, one could argue that the greed is coming from the institutional side… but that would dissolve the argument entirely. I’ll play devils advocate and assume Pauls is merely ignorant to the fact that Eduardo no longer lives in America and that besides for a few obscure countries such as Eritrea, the US is the only country in the world which taxes their citizens’ worldwide income.
The US keeps its citizens in a tax prison, meaning wherever they live in the world – they must still pay taxes.
And Eduardo made the strategic decision to plant a citizenship flag in Singapore. He has lived there for over 3 years and managed to get Singapore citizenship. A 2nd passport to strategically to lower his taxes?
But maybe this is a sign to the US government that a clear, flat tax would attract profitable enterprise and workers, rather than repel billionaires who leave for the greener grass on the other side of the fence. The one comment that truly stuck out.
Shawn Webb · Director of Sales at Ateda Interesting… reminds us that our govt competes globally for PERSONAL income as well as BUSINESS income.
Boom. You nailed it Mr. Webb. Governments of the world must compete for business AND citizens, by adjusting to a competitive rate on both a personal and a corporate level. We should stop looking at the people as servants to the State, the governments should be servants to the people. Hence the term: civil servant.
The United States is repelling away its own citizens. Worse, the people leaving are those with the means to do so: billionaires and other high net worth individuals. This will further contribute to the downfall of American society. As Roman empire increased taxes and seized their citizens property, those with means simply up and left. History repeats itself.
Sad to see really, when it could all be fixed by a simple, clear, reasonable tax system. At the end of the day, Singapore has a more attractive tax rate, and is inviting of Entrepreneurs who can provide value, and is willing to provide them a home and citizenship from whence they can live out the rest of their life.
This might be one of the reasons Singapore has more billionaires than anywhere else on Earth, and its pretty obvious why someone might want to get a passport from Singapore.
Two Additional things to consider: 1. Mr. Saverin probably paid a HEFTY exit tax. As US law states ….
“Effective June 2008, U.S. citizens who renounce their citizenship are subject under certain circumstances to an expatriation tax, which is meant to extract from the expatriate taxes that would have been paid had he remained a citizen: all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date, which usually results in a capital gain, which is taxable income”
Besides the lawyers and CPA’s that worked on this, most will never know the amount that he will have to pay to the US government over the coming years, but my guess is that it is sizeable. 2. Mr. Saverin may not be allowed back into the United States…
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
Renouncing your US citizenship is a big decision, but its one that increasing numbers of Americans are deciding to make. Note that you must have another citizenship in place and that the US will not let you be stateless.
There is a famous quote: “The two things in life which are certain are death and taxes.”
If you want to learn more about Singapore, here are some articles where you can read more:
- What the Singapore Payment Services Act means for Fintech and Crypto Businesses
- Where to set up a Securities Token Exchange
- Where to set up an International Business – Part 2: Asia
- Where to set up an International Business – Part 1: Offshore vs Onshore
- Where to market a Tokenized Fund Offering
- Where to set up a Tokenized Fund