Senators Charles Schumer of N.Y. and Bob Casey of Pa. are fierclely accusing Facebook co-founder Eduardo Saverin of fleeing the United States to avoid a $100 million tax. The tax stems from the Facebook initial public offering (IPO). Saverin abandoned U.S. citizenship and is moving to Singapore .
Casey said, “We simply cannot allow the ultra-wealthy to write their own rules,” continuing, “Mr. Saverin has benefited greatly from being a citizen of the United States but he has chosen to cast it aside and leave U.S. taxpayers with the bill.”
Saverin co-founded Facebook with CEO Mark Zuckerberg when they were colleagues at Harvard University. During a dispute with Zuckerberg, Saverin was booted off the Facebook founding team. Zuckerberg greatly decreased Saverin’s shares to fewer than 10 percent, according to The Washington Post.
Saverin will be blocked from re-entering the United States by the “Ex-PATRIOT Act.” “Ex-PATRIOT” stands for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy.” A news release from Schumer’s office read that, “The senators will call Saverin’s move an outrage and describe a plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country.”
In his own defense, Saverin said, “I was born in Brazil, I was an American citizen for about 10 years. I thought of myself as a global citizen,” he told the Times. He filed to cancel his citizenship in January 2011, well before Facebook filed its IPO paperwork.
The bill imposed assumes that any citizen who abandons the United States with an income tax liability of at least $148,000 over the last five years, is avoiding paying that tax. Without a legitimate reason for leaving, the citizen is taxed any gains he or she would have made from profits in the United States.
One condition Schumer’s spokesman reported on was a grace period for Saverin. If he pays off all loans before the bill is passed, he will be free of any other charges.
With the bill in place, Saverin would be expected to pay 30 percent of his earnings in the time he takes to avoid the tax from the Facebook IPO.
However, Saverin also indicated that he followed the law and paid an exit tax during the time before the Facebook IPO made its impact. But Saverin has a reputation of living a lavish lifestyle that he claims is inaccurate.
Saverin’s spokesman Tom Goodman said, “We continue to tell the truth, which is Eduardo’s decision had nothing to do with taxes and everything to do with his desire to live and work in Singapore. He is a native of Brazil. People seem to be responding to perception, not reality, and that is unfortunate, to say the least. We are unequivocal in our position that taxes were not a factor in his decision.”
Saverin continues to rebut the impact of the Facebook IPO on his depart.