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Facebook co-founder gives up u.s. citizenship — is he ungrateful,or heroic? by efwegbe erergeer
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Facebook co-founder gives up u.s. citizenship — is he ungrateful,or heroic? |
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Business,Business News,Business Opportunities
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Last Friday, we learned that Eduardo Saverin, one of theco-founders of Facebook , had renounced his American citizenship in what seemed to be atransparent ploy to escape a hefty bill from the IRS in the wake of Facebook s upcoming IPO, widely expected tomake a lot of well-connected people a crazy amount of money. Naturally, the news rubbed a lot of those outside that particular social network the wrong way. Internet message boards bristledwith denunciations of Saverin s treachery and promises to renounce Facebook . Way to defriend America, [expletive deleted], one annoyedAmerican taxpayer tweeted . Another Twitterer, who happened to be outspoken rich guy MarcCuban, told his followers that if i could realistically stop using facebook, I would.Just wrong.
(MORE: This is your Life (According to Your New Timeline) ) The story behind Saverin s move is a little more complicated thanthe headlines suggest. The Brazilian-born, Singapore-based investorwith the cherub face was one of Mark Zuckerberg s original backers during Facebook s Harvard days; while nolonger involved in the company as an executive, he retains a 4%stake, which could be worth as much as $4 billion after Facebook goes public. There s no question that by giving up his American citizenship andsettling down in Singapore, an investor-friendly tax haven with nocapital gains taxes, he ll spare himself a hefty bill from UncleSam. He s not going to escape the IRS entirely, though; the UScharges citizenship-renouncers an exit tax which could add up to as much as $150 million in his case , one tax expert contacted by the Los Angeles Times estimates. Saverin maintains that his renunciation of American citizenship,which actually took place last September, wasn t a ploy to skipout on American taxes, but rather an attempt to free himself fromburdensome restrictions on American investors abroad.
U.S.citizens are severely restricted as to what they can invest in andwhere they can maintain accounts, the Wall Street Journal quotes a spokesman for Saverin saying . Many foreign funds and banks won t accept Americans. This was afinancial rather than a tax motive. As WSJ s John D. McKinnon goes on to note: It s true many U.S.
expats complain that American rules are makinglife more difficult for them. Those include the U.S. tax system sglobal reach (many countries tax based on residency); foreign bankaccount reporting rules; and the Foreign Account Tax Compliance Act(FATCA), which requires foreign financial institutions to startreporting to the IRS on U.S. citizens accounts. Expats say as a result of all the regulations, some foreign banksare dumping more U.S.
customers. Saverin is hardly the only one taking this particular route to bigtax savings. The number of those renouncing US citizenship hassoared eight times since the early aughties. As Derek Thompson of The Atlantic points out , nearly 1,800 others joined Saverin in defriending the UnitedStates last year. ( LIST: Social Windfall: Facebook IPO s Billion-Dollar Winners ) While some see Saverin s move as an act of profound ungratefulnessto the country that took him in back in 1992, others are defendinghim as a patriot of sorts for sticking it to the tax man.
OnForbes.com, John Tamny hails the Brazilian-turned-American-turned-Singaporean as something of an American hero for doing what he did. As Tamny figures it, Saverin s essential maneuver will hopefully get Americansthinking once again about our wrongheaded system of taxation. When individuals resist governmental hubris, we should exalttheir actions. Assuming nosebleed rates of taxation were a driver of Saverin sdecision, politicians will hopefully see that if too greedy aboutcollecting the money of others, they ll eventually collectnothing. And if you believe that, I ve got a barely used Ayn Rand novel tosell you. I am Agricultural Greenhouses writer, reports some information about shawls to knit , fleece fabric supplier.
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