If you’ve seen The Social Network, you’ll remember that Mark Zuckerberg did not start Facebook alone. American legislators also haven’t forgotten Eduardo Saverin and they are gunning for him.
We are one day away from one of the biggest technology IPO’s on record. Facebook plans to raise $16 billion in its initial public offering which stands to valued the company at $104 billion come tomorrow. Many early investors will be laughing on their way to the bank bar one unlucky character whose name is Eduardo Saverin.
Saverin, who co-founded Facebook with Mark Zuckerberg back in the day, has been given a stern warning by Chuck Schumer, a New York Democratic Party legislator, to pay up or never come back to the United States.
Schumer and another senator Bob Casey have announced their Ex-PATRIOT bill which stands for Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy. In its sights is the former Facebook co-founder. If the bill becomes law, Saverin will have to cough up to $67 million in taxes.
The senators are on a personal war path against other super-rich individuals who aren’t grateful enough. Their proposed legislation will re-impose taxes on expatriates even after they have abandoned the United States and taken up residence in a foreign country.
The law change would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their US citizenship. It would also bar these individuals from ever re-entering the United States again. In plain English, if you are rich, don’t even think about moving as a strategy to avoid paying taxes. This is why New Zealanders should be grateful that our government is not as strong handed …. yet.
What we need to remember is that in September 2011, Saverin relinquished his American citizenship before the company announced its planned initial public offering of stock. But with a profile tied to Facebook, regardless of how well guarded his life is, the government, media and the public will always remember him.
Saverin, who is now based in Singapore, owns an estimated four percent of Facebook and stands to make $4 billion out of it when the company goes public. Singapore has no capital gains tax and that means he would get to keep all of it.
One could argue that Saverin has helped make a company that has created jobs for many, not just in the US but around the world. It is a morally, grey area on who is right or wrong. My opinion is that the tactics being adopted to punish him, if the bill gets the green light, are harsh. Let us know what you think. Should the US government pursue Saverin over his wealth gain even though he is no longer an American citizen?