I suspect most have heard about Facebook co-founder Eduardo Saverin’s decision to renounce his American citizenship, a move that will save Saverin from having to pay federal capital gains taxes just as Facebook’s IPO reaps a windfall.
Though he denies the move is related to tax avoidance, Saverin’s announcement has not been well received. Indeed, Sens. Chuck Schumer (D-N.Y.) and Bob Casey (D-Pa.) unveiled the Ex-PATRIOT Act – “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act – yesterday, which would not only hit folks like Saverin with a hefty new tax burden, and may prevent reentrance into the United States.
Schumer told reporters yesterday, “Senator Casey and I have a status update for him: pay your taxes, or don’t set foot in the United States ever again.”
As it turns out, however, some on the right are rallying to Saverin’s defense. Forbes magazine ran a piece lauding him as a “hero,” while Sen. Orrin Hatch’s (R-Utah) office yesterday argued the tax code is the problem, not Saverin’s willingness to abandon the country.
Hatch’s spokeswoman, Antonia Ferrier, chastened Democratic Sens. Charles Schumer (N.Y.) and Bob Casey Jr. (Pa.) for seeking to punish the wealthy co-founder of Facebook for renounced his U.S. citizenship just a few months before he stood to gain millions in the social networking site’s initial public offering.
“You’d be hard pressed to find anyone applauding someone renouncing of his American citizenship to avoid his tax bill,” Ferrier said in a statement. “But as usual, the response from the other side of the aisle is a talking point rather than a real solution.”
A “real solution,” in this case, would mean reducing the “massive tax burden” Saverin and those at his income level currently have to pay.
There are a couple of important problems with this.
First, Saverin and other members of the 1% don’t have a “massive tax burden.” As a share of the national economy, taxes in the Obama era have reached their lowest levels in more than a half-century, and specifically on capital gains, taxes are “at a historically low rate, and even proposals to increase [the capital gains tax rate] slightly would still fall well short of approaching the rate during the 1970s.”
And second, since when do conservatives – up until recently, the self-appointed arbiters of patriotism – celebrate those who renounce their American citizenship as “heroes,” as the Forbes piece did?
Farhad Manjoo had a very good piece this week on the role America has played in creating opportunities for Saverin.
Would it be too much to say that America saved Eduardo Saverin? Probably. Maybe that’s just too overwrought. The Saverins were just another in a long line of immigrants who’d come to America for the opportunity it affords – the opportunity, among other things, to not have to worry that your child will be kidnapped just because you’ve become wealthy.
Just because his parents moved here doesn’t mean Eduardo Saverin owes America anything, right?
Yet if you study the trajectory of Saverin’s life – the path that took him from being an immigrant kid to a Harvard student to an instant billionaire to the subject of an Oscar-winning motion picture – it emerges as a uniquely American story. At just about every step between his landing in Miami and his becoming a co-founder of Facebook, you find American institutions and inventions playing a significant part in his success.
Those American institutions exist because Americans pay taxes – taxes Saverin won’t pay as he gives up on the country that helped him succeed.
Republicans defending him and making excuses for him seems like an inexplicable mistake.