Last week Democratic Senators Charles Schumer and Bob Casey Jr. announced a new bill that would punish those expatriates who renounced their U.S. citizenship in order to avoid hefty tax bills. Yesterday House Speaker John Boehner publicly revealed that he too would support such laws.
Their bill, which has been named the Ex-Patriot Act, has been formulated as a direct response to the actions of Facebook’s co-founder Eduardo Saverin, who renounced his U.S. citizenship last year in order to avoid paying taxes on his massive earnings from the company. Saverin, who is 30, owns a 4 percent of Facebook, a share that last week was valued at approximately 4 billion pounds. According to newspaper reports, Saverin’s decision to give up his U.S. passport and move to Singapore has saved him between $67 and $100 million dollars in taxes, although he denies that he choose to relinquish his citizenship in order to avoid the tax bill.
In response to the accusations, Saverin’s spokesman Tom Goodman informed the Wall Street Journal that Saverin’s decision to give up his passport was not motivated by tax reasons but was in response to complicated U.S. tax rules and procedures that make it very difficult for citizens to live and bank overseas: “U.S. citizens are severely restricted as to what they can invest in and where they can maintain accounts,” Goodman said. “Many foreign funds and banks won’t accept Americans. This was a financial rather than a tax motive.”
Talking to the Los Angeles Times, Saverin revealed that he had been living in Singapore since 2009 and that he felt that his current situation had been misinterpreted by many people in the United States: “I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen. It is unfortunate that my personal choice has led to a public debate, based entirely on speculation and misinformation.”
According to the planned legislation any expatriate who had a total net worth of over $2 million USD or had an average income tax liability of over $148,000 USD over the previous five years would be severely punished if the Internal Revenue Service believe that they relinquished their passport in order to avoid paying taxes. Such individuals may face taxes of 30% of their total wealth and may be prevented from ever entering the United States again.
Yesterday House Speaker John Boehner appeared on ABC’s “This Week” and described Saverin’s decision to renounce his United States citizenship as “absolutely outrageous.” He commented that, while he felt that such as move was “already against the law” he would support the new bill that was sponsored by Sens. Chuck Schumer and Bob Casey that would ensure Saverin paid the taxes and bar him from re-entering the U.S. “If it’s necessary, I’d surely support it,” he said.