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Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO

106 points by jackfoxy 14y ago

antr 14y ago
The tax reporting implications and liabilities of becoming US citizen are a clear turnoff for many people. Cash is king.
- andrewpi 14y ago
  Yep.. it's becoming increasingly hard to do any business with overseas banks if you have US Citizenship. Foreign banks don't want the liability.
  - antr 14y ago
    Very good point. In Switzerland, if you have a US passport, it is pretty difficult to open a bank account and/or get financial advice. Apparently bank/advisors can get into trouble for reasons I am not well up to date.
    - acangiano 14y ago
      Yup. People with dual citizenship ("American" and "Swiss") living and working in Switzerland, have a hard time opening a bank account due to their American citizenship.
borski 14y ago
The catch here is: good luck getting back in. The US gov't takes notice of this stuff, and it's just good to be aware of the implications for if you ever want to come back to the US. Not saying it's wrong or right (by all means, the less tax the better), but it's important to be aware of the consequences.
- eyeareque 14y ago
  Would you give up US citizenship for 1 billion (I'm guessing on how much he is saving) in saved taxes?
  - dfxm12 14y ago
    This isn't just citizenship. This is giving up the ability to obtain a visa: http://www.uscis.gov/ilink/docView/22CFR/HTML/22CFR/0-0-0-1/0-0-0-55/0-0-0-441.html http://www.uscis.gov/ilink/docView/22CFR/HTML/22CFR/0-0-0-1/... So, if the US government cares, this person could be denied entrance to the US.
    - badusername 14y ago
      Isn't tax evasion speculation rather than concrete proof in this case? It seems that it was clearly communicated that the reason for giving up the citizenship was his residency in Singapore for an indefinite time.
  - joeblossom 14y ago
    If I'm still worth more than a billion, no I would not give up my citizenship. When you're worth more than a billion dollars, as Bill Gates has said, money is of no worry any more. You would have to be an idiot to lose it all.
  - krschultz 14y ago
    Hell no. There is a point in time when you cross the line between 'money I can spend in my lifetime' and 'money I can't spend in my lifetime'. There literally is a point where you can't spend the money fast enough (on objects for personal use) to lose it. You can lose it doing dumb things in financial markets or with a business, but if you have $3 billion dollars it is impossible to spend it fast enough to lose it. You can burn $40 million down to see (see: most musicians and athletes), but not $3 billion. Even earning 2% interest on 3 Billion (i.e. Treasury bonds or something nearly risk-free), you can make $165,000 A DAY. So buy 3 cars today, and tomorrow, and the day after that, and the day after that. You just can't do it. So whats the difference between $2 billion and $3 billion? Not all that much. (And I don't believe he is avoiding a billion dollar tax bill, he still has to pay some level of exit tax). But the difference between being able to come to the US and not coming to the US is significant. What if he wants to go to a movie premiere in LA, or skiing with friends in Aspen, or going to Warren Buffet's annual investors meeting, or seeing a VC in Silicon Valley? You can shop anywhere, you can vacation anywhere, and you can eat anywhere. But some events only happen in one country or another. Some partnerships only happen in one country or another. That's obviously assuming the IRS decided he renounced his citizenship for tax reasons and he is banned from the US.
cpt1138 14y ago
I like hearing about sociopaths that utilize the infrastructure provided by the U.S. but don't want to pay back. Contrast that to the evil poor that utilize the infrastructure, have nothing but are demonized for not paying.
- antr 14y ago
  "sociopaths that utilize the infrastructure provided by the U.S." given the number of high qualified jobs Facebook has created, the taxes that both FB and employees are paying, and Facebook's continued support towards the startup ecosystem, calling ES a sociopath is simply wrong.
  - FreakLegion 14y ago
    Saverin may or may not be a sociopath[1], but Facebook's economic impact isn't evidence of it one way or the other. 1. In the clinical sense it's hardly reasonable to infer that he is; the parent poster was being hyperbolic.
- vidarh 14y ago
  If he'd actually continued to live in the US, I might have sympathy for this argument. But he's moved out. The US tax regime where expat US citizens still have to pay full tax to the US (except where there's a tax treaty that limits double taxation) is exceptionally harsh - almost no other countries do that.
  - dons 14y ago
    > The US tax regime where expat US citizens still have to pay full tax to the US (except where there's a tax treaty that limits double taxation) is exceptionally harsh - almost no other countries do that. This. The US keeps taxing you after you leave. And for citizens, it is for life.
    - Splines 14y ago
      That's pretty hostile. I came here and now have a green card, with the intention of eventually gaining citizenship. Now I'm wondering how much I've harmed my future mobility (should I choose to return to my birth country).
psychotik 14y ago
Wikipedia says his middle initial is 'P', but the USCIS site says a Eduardo Luiz Saverin renounces citizenship. Anyone know which is correct?
- antr 14y ago
  Middle name is with "L": http://www.thecrimson.com/image/2005/2/24/connectu-founders-cameron-sh-winklevoss/ http://www.thecrimson.com/image/2005/2/24/connectu-founders-...
andrewpi 14y ago
Interesting that Saverin only became a US citizen in 1998.
jpdoctor 14y ago
I predict the soon-to-be-enacted "International Tax Fairness" law, for which I would say to congress: Whoosh.
dtweney 14y ago
My knee-jerk reaction is: What an ass. He comes here, gets an education, co-founds a company, and gets rich from it. And yes, he's spending money and creating jobs -- but he's also benefiting from the infrastructure, the business climate, the population, and more. And when it comes time to pay his tax bill, he skips out. Not cool.
- vladd 14y ago
  It's legal to give up your citizenship - he plans to live in Singapore and he must still pay the exit tax. This is what the law says and he doesn't break it. If you want to discuss this emotionally, try to see his point of view as well: US is the only nation in the world (ok, maybe with 1-2 other exceptions from Africa) where residency doesn't determine the tax authority you're subject to. He plans to live and have his residency in Singapore and pay taxes there but US would still like to have his tax money, who's the ass?
  - amalag 14y ago
    There are usually tax agreements with countries to avoid double taxation.
    - velshin 14y ago
      I lived abroad for years and was double taxed on part of my income. The tax treaties and exclusions are limited to certain dollar amounts. He's likely well above those limits.
    - psykotic 14y ago
      The US is one of the few countries that doesn't allow its citizens to avoid double taxation. You are still liable for US taxes on foreign-earned income above $80,000 per year.
      - timbre 14y ago
        You can deduct taxes paid to your country of residence, so it's more max-taxation than double-taxation.
staunch 14y ago
Just curious, how hard is it to regain US citizenship -- impossible?
- TazeTSchnitzel 14y ago
  Could you not be naturalised after renouncing it?
- mullingitover 14y ago
  He can invest a mere million dollars here and get an entrepreneur green card - http://www.usimmigrationlaw.net/green-card-entrepreneur-investor.htm http://www.usimmigrationlaw.net/green-card-entrepreneur-inve...
- deleted 14y ago
  [deleted]
- nsoldiac 14y ago
  From a top member of a legal website's forum (so take this with a grain of salt): "It seems that once you renounced the US citizenship your situation will be like any other who is applying for a Green card for the first time." (this is after quoting some wordy US regulatory docs)
- rprasad 14y ago
  Essentially, yes. A person who renounces U.S. citizenship is generally not able to take advantage of the special visa programs (like the EB5 investor program) to regain residency. Furthermore, their applications for visas, etc., are also (informally) put in the lowest-priority bracket unless they pony up to be placed in the priority queue. Moreover, any attempt to renounce their renunciation of citizenship results in a hefty tax bill for the period they were not a citizen, as the initial renunciation will be treated (by the IRS) as an attempt to evade taxation. Indeed, merely returning to the U.S. for a period of more than 183 days (one of the tests for residence for taxation purposes) could trigger this result. EDIT: Also note, as discussed below, he would be deemed "inadmissible" for re-entry if he was deemed to have a tax avoidance motive for renouncing his citizenship. The consequence would be a permanent ban from the U.S. (and the hefty tax bill would remain intact).
philmcc 14y ago
I wonder if the negative reaction to this is just a result of scale. Most people I know do everything they can, both legally and questionably, in order to minimize their tax liability. (And they actually live in the United States.)
julieblakemore 14y ago
Saverin's other business ventures make his renunciation of US Citizenship far more palatable than many billionaires who jump ship for Monaco or some similar tax-shield country
josefonseca 14y ago
Never heard of him here in Brazil. He probably gave up his Brazilian citizenship as well. I wouldn't be surprised though, taxes here are 3x those in the USA.
blahedo 14y ago
See also http://news.ycombinator.com/item?id=3960028 http://news.ycombinator.com/item?id=3960028 .
nsoldiac 14y ago
Guys, there is such as a thing as a US Visa for Foreign Investors: http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=facb83453d4a3210VgnVCM100000b92ca60aRCRD&vgnextchannel=facb83453d4a3210VgnVCM100000b92ca60aRCRD http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b... He'll basically throw half a million at any cash-hungry startup and get a visa in no time, that'll be pocket change for him in few months. Getting back into the US will be no problem this dude. There's always the rafting option from Cuba too :P (I'm going to hell lol).
- rprasad 14y ago
  He is not eligible for that program (the EB5 visa), as a result of renouncing his citizenship.
guelo 14y ago
Let's see, he's 30 so maybe he has 50 years to live. If he got $3.84 billion and got a conservative 5% interest on that my back of the envelope calculation says he could spend $115 million a year for the rest of his life. Now spending $115 mill per year doesn't count buying assets like mansions or fancy art, those are investments. It would be $115 million on apparel or personal employees or the depreciation of cars, yachts and private jets. It would actually be hard to do and take a lot of work to spend it all every year. If he paid the american taxes, which are 15% for cap gains but let's say he loses a third so he's left with $2.56 billion. He would be able to spend $77 million per year. A $38 million per year difference seems like a lot of money, but is their any difference between a $115 million a year lifestyle and a $77 million a year lifestyle? In both cases you have more money than you can spend year in and year out. You're really getting diminishing lifestyle returns the more money you make. Maybe at the $115 mill level you'd feel more comfortable buying another private jet or having an extra 100 personal employees to take care of your stuff, but it really wouldn't be that much of a difference. I bet if he had a talk with some older billionaires they would tell him that it's not worth the hassle.
- mhb 14y ago
  Maybe he just has the crazy notion that he can make the world better if he spends the money than if the US government does.
- crazygringo 14y ago
  It is a huge difference, however, if you think: I could give that money to the government, without any control over it, or I could donate it to specific charities, or even fund my own charitable organization, and have complete control over how it was used. I'm not necessarily saying that one is better than the other (private charity might have the potential to be more effective, but is certainly less democratic). But the choice is not merely between private hedonism and government coffers. You can do good with money outside of taxes. Plus, if it's invested in other companies (as one would assume it will be), then it helps grow those companies, which if successful, will presumably pay taxes themselves. I'm not arguing against capital-gains taxes in general, but the question of where taxes are collected along the chain is purely practical, not moral. If Saverin isn't paying additional taxes now, it's not like that money is disappearing forever.
underwater 14y ago
The reaction of commenters who gleefully explain he may not be able to become a citizen again is pretty amusing. What makes you think he wants to reapply? Billions of people live fulfilling lives without ever stepping foot in the United States.
- Klinky 14y ago
  Well his bank account would probably be less fulfilled if he hadn't stepped foot in the United States.
  - rubiety 14y ago
    This anecdote does nothing to detract from the central point, stated again: "Billions of people live fulfilling lives without ever stepping foot in the United States."
    - Klinky 14y ago
      How many billions and who defines "fulfilling"? Much of the world actually lives in poverty. It's also kind of a silly point to make when we're talking about a guy who already set foot in the United States. Why did he come to the United States if he was perfectly fulfilled in his home country where he was facing the threat of being kidnapped? I think it's unlikely he'll want to visit again, but it's not like his initial visit was really under what some would consider voluntary circumstances.
lawnchair_larry 14y ago
Good for him. I fully support higher taxes on the rich, but this notion that the US can tax you anywhere in the world is downright offensive. He hasn't been in the US since the company started, so I have trouble seeing a case for him owing the US anything.
hasker 14y ago
I am not sure anyone noted yet that his Facebook earnings will fall entirely under capital gains income, which only gets taxed at 15% in the United States (http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United...). Singapore has ZERO capital gain tax, so he may be trying to avoid any tax burden on this income. Still, 15% remain quite low (The go up a bit in 2013.), and I suspect he would not have to pay it until actually selling his shares. Some reports say he has already sold over half his stake, so I am not sure this Singaporean move does that much for him. There are plenty of ways to shelter money in the United States (http://www.forbes.com/sites/deborahljacobs/2012/03/20/how-facebook-billionaires-dodge-mega-millions-in-taxes/ http://www.forbes.com/sites/deborahljacobs/2012/03/20/how-fa...) and pay basically nothing. Everyone here likes to make the tax burden on US citizens outside of the US sound so horrendous, but my experience is that it is a worst of taxation situation. One gets to exclude the first 95k of income from US, but I think you also can run money through a housing allowance of around $100k depending on the cost of living. Yes, the US tax system sucks, but the weather and disney-like atmosphere in Singapore suck more in my opinion. I think I could have fun living there for a few years, but a lifetime would be hard. The US will definitely consider this a move to avoid taxation. He will probably never be welcome again in the US, and essentially becomes a pawn in international extradition should some US administration in the future have a point to prove. If it were me, I would just dump a ton of money behind Ron Paul.
wissler 14y ago
Saverin's case is potentially misleading. Many American citizens living abroad are under great hardship caused by the US tax system following them around the globe. The United States is the only developed country in the world that harasses its citizens for taxes on wages earned in foreign jurisdictions. E.g.: ""It makes absolutely no sense," said Senator Jim DeMint, Republican of South Carolina, of a system that makes the United States the sole developed country to tax income earned by its citizens abroad." http://www.nytimes.com/2008/04/01/world/americas/01iht-expats.4.11594315.html http://www.nytimes.com/2008/04/01/world/americas/01iht-expat...
- 9999 14y ago
  You can exclude $92,900 worth of foreign income from U.S. taxation (and another $92,900 for your spouse).
  - wissler 14y ago
    So?
9999 14y ago
So let me get this straight: rich kid at Harvard gives his bright friend some money to rent servers to run a service that gets popular. Rich kid doesn't contribute any more. Rich kid gets cut out of company because he's not doing shit any more, then sues the company. Company sucks it up and pays him off. Then rich kid renounces citizenship and splits for a tax haven with all of that money, completely avoiding contributing anything further to the environment that made him billions of dollars. And the popular narrative is that Zuckerberg is the asshole? Huh.
- citricsquid 14y ago
  You're assuming he is leaving for tax purposes. If he doesn't live in the United States why would he retain his citizenship? He could be denouncing it for entirely unrelated reasons, someone stated below that to get citizenship in Singapore you must be a citizen of only Singapore. Nowhere has it been confirmed, this is all speculation. He hasn't just suddenly "split", he left the US almost 2 years ago. He already paid taxes on hundreds of millions, I really doubt that he hasn't paid his "fair share".
  - gee_totes 14y ago
    If you are a US Citizen, you have to pay taxes, regardless of where you live, so I am guessing taxes paid a role in his decision.
    - nsmartt 14y ago
      Would he also have to pay taxes in Singapore? If so, I can see how this move would be acceptable. Even if not, I don't think many would find this unacceptable if he had done this before the mention of the IPO. It's possible that he has been considering the move for a while, and hasn't bothered to go through with it until a significant chunk of his income became at risk.
      - romeodelight 14y ago
        Singapore doesn’t have a capital gains tax. A 15% long-term capital gains tax rate on $3.84B (4% of Facebook), He saved $576 Million by giving up his citizenship and moving to Singapore.
sbov 14y ago
Given the exit tax, am I the only one who sees this as a risky move? From what I can tell, he's going to have to pay 30% taxes on his unrealized facebook gains. As opposed to 15% long term capital gains. Yeah, it's not publicly traded so they can screw with the valuation, but how will the government take that given liquidity is just around the corner? I'm not an accountant, but this seems like type of scheme that fortunes are lost on. Anyone else more informed have an opinion on the likelihood of him getting screwed over this?
laic 14y ago
So he does NOT support the Warren Buffet Rule?
andr3w321 14y ago
This is becoming increasingly common in recent years. http://online.wsj.com/article/SB10001424052702303592404577362050670738024.html http://online.wsj.com/article/SB1000142405270230359240457736... It's not just having to pay extra tax every year, the mere act of filing a return abroad is headache enough and if you make a mistake you might see jail time.
onetwothreefour 14y ago
This thread is full of misinformed, judgemental, jingoistic BS. What this guy does is none of your business, and I don't think he gives a damn what you think.

106 points by jackfoxy 14y ago

antr 14y ago

The tax reporting implications and liabilities of becoming US citizen are a clear turnoff for many people. Cash is king.

andrewpi 14y ago
Yep.. it's becoming increasingly hard to do any business with overseas banks if you have US Citizenship. Foreign banks don't want the liability.
- antr 14y ago
  Very good point. In Switzerland, if you have a US passport, it is pretty difficult to open a bank account and/or get financial advice. Apparently bank/advisors can get into trouble for reasons I am not well up to date.
  - acangiano 14y ago
    Yup. People with dual citizenship ("American" and "Swiss") living and working in Switzerland, have a hard time opening a bank account due to their American citizenship.

borski 14y ago

The catch here is: good luck getting back in. The US gov't takes notice of this stuff, and it's just good to be aware of the implications for if you ever want to come back to the US. Not saying it's wrong or right (by all means, the less tax the better), but it's important to be aware of the consequences.

eyeareque 14y ago
Would you give up US citizenship for 1 billion (I'm guessing on how much he is saving) in saved taxes?
- dfxm12 14y ago
  This isn't just citizenship. This is giving up the ability to obtain a visa: http://www.uscis.gov/ilink/docView/22CFR/HTML/22CFR/0-0-0-1/0-0-0-55/0-0-0-441.html http://www.uscis.gov/ilink/docView/22CFR/HTML/22CFR/0-0-0-1/... So, if the US government cares, this person could be denied entrance to the US.
  - badusername 14y ago
    Isn't tax evasion speculation rather than concrete proof in this case? It seems that it was clearly communicated that the reason for giving up the citizenship was his residency in Singapore for an indefinite time.
- joeblossom 14y ago
  If I'm still worth more than a billion, no I would not give up my citizenship. When you're worth more than a billion dollars, as Bill Gates has said, money is of no worry any more. You would have to be an idiot to lose it all.
- krschultz 14y ago
  Hell no. There is a point in time when you cross the line between 'money I can spend in my lifetime' and 'money I can't spend in my lifetime'. There literally is a point where you can't spend the money fast enough (on objects for personal use) to lose it. You can lose it doing dumb things in financial markets or with a business, but if you have $3 billion dollars it is impossible to spend it fast enough to lose it. You can burn $40 million down to see (see: most musicians and athletes), but not $3 billion. Even earning 2% interest on 3 Billion (i.e. Treasury bonds or something nearly risk-free), you can make $165,000 A DAY. So buy 3 cars today, and tomorrow, and the day after that, and the day after that. You just can't do it. So whats the difference between $2 billion and $3 billion? Not all that much. (And I don't believe he is avoiding a billion dollar tax bill, he still has to pay some level of exit tax). But the difference between being able to come to the US and not coming to the US is significant. What if he wants to go to a movie premiere in LA, or skiing with friends in Aspen, or going to Warren Buffet's annual investors meeting, or seeing a VC in Silicon Valley? You can shop anywhere, you can vacation anywhere, and you can eat anywhere. But some events only happen in one country or another. Some partnerships only happen in one country or another. That's obviously assuming the IRS decided he renounced his citizenship for tax reasons and he is banned from the US.

cpt1138 14y ago

I like hearing about sociopaths that utilize the infrastructure provided by the U.S. but don't want to pay back. Contrast that to the evil poor that utilize the infrastructure, have nothing but are demonized for not paying.

antr 14y ago
"sociopaths that utilize the infrastructure provided by the U.S." given the number of high qualified jobs Facebook has created, the taxes that both FB and employees are paying, and Facebook's continued support towards the startup ecosystem, calling ES a sociopath is simply wrong.
- FreakLegion 14y ago
  Saverin may or may not be a sociopath[1], but Facebook's economic impact isn't evidence of it one way or the other. 1. In the clinical sense it's hardly reasonable to infer that he is; the parent poster was being hyperbolic.
vidarh 14y ago
If he'd actually continued to live in the US, I might have sympathy for this argument. But he's moved out. The US tax regime where expat US citizens still have to pay full tax to the US (except where there's a tax treaty that limits double taxation) is exceptionally harsh - almost no other countries do that.
- dons 14y ago
  > The US tax regime where expat US citizens still have to pay full tax to the US (except where there's a tax treaty that limits double taxation) is exceptionally harsh - almost no other countries do that. This. The US keeps taxing you after you leave. And for citizens, it is for life.
  - Splines 14y ago
    That's pretty hostile. I came here and now have a green card, with the intention of eventually gaining citizenship. Now I'm wondering how much I've harmed my future mobility (should I choose to return to my birth country).

psychotik 14y ago

Wikipedia says his middle initial is 'P', but the USCIS site says a Eduardo Luiz Saverin renounces citizenship. Anyone know which is correct?

antr 14y ago
Middle name is with "L": http://www.thecrimson.com/image/2005/2/24/connectu-founders-cameron-sh-winklevoss/ http://www.thecrimson.com/image/2005/2/24/connectu-founders-...

andrewpi 14y ago

Interesting that Saverin only became a US citizen in 1998.

jpdoctor 14y ago

I predict the soon-to-be-enacted "International Tax Fairness" law, for which I would say to congress: Whoosh.

dtweney 14y ago

My knee-jerk reaction is: What an ass. He comes here, gets an education, co-founds a company, and gets rich from it. And yes, he's spending money and creating jobs -- but he's also benefiting from the infrastructure, the business climate, the population, and more. And when it comes time to pay his tax bill, he skips out. Not cool.

vladd 14y ago
It's legal to give up your citizenship - he plans to live in Singapore and he must still pay the exit tax. This is what the law says and he doesn't break it. If you want to discuss this emotionally, try to see his point of view as well: US is the only nation in the world (ok, maybe with 1-2 other exceptions from Africa) where residency doesn't determine the tax authority you're subject to. He plans to live and have his residency in Singapore and pay taxes there but US would still like to have his tax money, who's the ass?
- amalag 14y ago
  There are usually tax agreements with countries to avoid double taxation.
  - velshin 14y ago
    I lived abroad for years and was double taxed on part of my income. The tax treaties and exclusions are limited to certain dollar amounts. He's likely well above those limits.
  - psykotic 14y ago
    The US is one of the few countries that doesn't allow its citizens to avoid double taxation. You are still liable for US taxes on foreign-earned income above $80,000 per year.
    - timbre 14y ago
      You can deduct taxes paid to your country of residence, so it's more max-taxation than double-taxation.

staunch 14y ago

Just curious, how hard is it to regain US citizenship -- impossible?

TazeTSchnitzel 14y ago
Could you not be naturalised after renouncing it?
mullingitover 14y ago
He can invest a mere million dollars here and get an entrepreneur green card - http://www.usimmigrationlaw.net/green-card-entrepreneur-investor.htm http://www.usimmigrationlaw.net/green-card-entrepreneur-inve...
deleted 14y ago
[deleted]
nsoldiac 14y ago
From a top member of a legal website's forum (so take this with a grain of salt): "It seems that once you renounced the US citizenship your situation will be like any other who is applying for a Green card for the first time." (this is after quoting some wordy US regulatory docs)
rprasad 14y ago
Essentially, yes. A person who renounces U.S. citizenship is generally not able to take advantage of the special visa programs (like the EB5 investor program) to regain residency. Furthermore, their applications for visas, etc., are also (informally) put in the lowest-priority bracket unless they pony up to be placed in the priority queue. Moreover, any attempt to renounce their renunciation of citizenship results in a hefty tax bill for the period they were not a citizen, as the initial renunciation will be treated (by the IRS) as an attempt to evade taxation. Indeed, merely returning to the U.S. for a period of more than 183 days (one of the tests for residence for taxation purposes) could trigger this result. EDIT: Also note, as discussed below, he would be deemed "inadmissible" for re-entry if he was deemed to have a tax avoidance motive for renouncing his citizenship. The consequence would be a permanent ban from the U.S. (and the hefty tax bill would remain intact).

philmcc 14y ago

I wonder if the negative reaction to this is just a result of scale. Most people I know do everything they can, both legally and questionably, in order to minimize their tax liability. (And they actually live in the United States.)

julieblakemore 14y ago

Saverin's other business ventures make his renunciation of US Citizenship far more palatable than many billionaires who jump ship for Monaco or some similar tax-shield country

josefonseca 14y ago

Never heard of him here in Brazil. He probably gave up his Brazilian citizenship as well. I wouldn't be surprised though, taxes here are 3x those in the USA.

blahedo 14y ago

See also http://news.ycombinator.com/item?id=3960028 http://news.ycombinator.com/item?id=3960028 .

nsoldiac 14y ago

Guys, there is such as a thing as a US Visa for Foreign Investors: http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=facb83453d4a3210VgnVCM100000b92ca60aRCRD&vgnextchannel=facb83453d4a3210VgnVCM100000b92ca60aRCRD http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b... He'll basically throw half a million at any cash-hungry startup and get a visa in no time, that'll be pocket change for him in few months. Getting back into the US will be no problem this dude. There's always the rafting option from Cuba too :P (I'm going to hell lol).

rprasad 14y ago
He is not eligible for that program (the EB5 visa), as a result of renouncing his citizenship.

guelo 14y ago

Let's see, he's 30 so maybe he has 50 years to live. If he got $3.84 billion and got a conservative 5% interest on that my back of the envelope calculation says he could spend $115 million a year for the rest of his life. Now spending $115 mill per year doesn't count buying assets like mansions or fancy art, those are investments. It would be $115 million on apparel or personal employees or the depreciation of cars, yachts and private jets. It would actually be hard to do and take a lot of work to spend it all every year. If he paid the american taxes, which are 15% for cap gains but let's say he loses a third so he's left with $2.56 billion. He would be able to spend $77 million per year. A $38 million per year difference seems like a lot of money, but is their any difference between a $115 million a year lifestyle and a $77 million a year lifestyle? In both cases you have more money than you can spend year in and year out. You're really getting diminishing lifestyle returns the more money you make. Maybe at the $115 mill level you'd feel more comfortable buying another private jet or having an extra 100 personal employees to take care of your stuff, but it really wouldn't be that much of a difference. I bet if he had a talk with some older billionaires they would tell him that it's not worth the hassle.

mhb 14y ago
Maybe he just has the crazy notion that he can make the world better if he spends the money than if the US government does.
crazygringo 14y ago
It is a huge difference, however, if you think: I could give that money to the government, without any control over it, or I could donate it to specific charities, or even fund my own charitable organization, and have complete control over how it was used. I'm not necessarily saying that one is better than the other (private charity might have the potential to be more effective, but is certainly less democratic). But the choice is not merely between private hedonism and government coffers. You can do good with money outside of taxes. Plus, if it's invested in other companies (as one would assume it will be), then it helps grow those companies, which if successful, will presumably pay taxes themselves. I'm not arguing against capital-gains taxes in general, but the question of where taxes are collected along the chain is purely practical, not moral. If Saverin isn't paying additional taxes now, it's not like that money is disappearing forever.

underwater 14y ago

The reaction of commenters who gleefully explain he may not be able to become a citizen again is pretty amusing. What makes you think he wants to reapply? Billions of people live fulfilling lives without ever stepping foot in the United States.

Klinky 14y ago
Well his bank account would probably be less fulfilled if he hadn't stepped foot in the United States.
- rubiety 14y ago
  This anecdote does nothing to detract from the central point, stated again: "Billions of people live fulfilling lives without ever stepping foot in the United States."
  - Klinky 14y ago
    How many billions and who defines "fulfilling"? Much of the world actually lives in poverty. It's also kind of a silly point to make when we're talking about a guy who already set foot in the United States. Why did he come to the United States if he was perfectly fulfilled in his home country where he was facing the threat of being kidnapped? I think it's unlikely he'll want to visit again, but it's not like his initial visit was really under what some would consider voluntary circumstances.

lawnchair_larry 14y ago

Good for him. I fully support higher taxes on the rich, but this notion that the US can tax you anywhere in the world is downright offensive. He hasn't been in the US since the company started, so I have trouble seeing a case for him owing the US anything.

hasker 14y ago

I am not sure anyone noted yet that his Facebook earnings will fall entirely under capital gains income, which only gets taxed at 15% in the United States (http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United...). Singapore has ZERO capital gain tax, so he may be trying to avoid any tax burden on this income. Still, 15% remain quite low (The go up a bit in 2013.), and I suspect he would not have to pay it until actually selling his shares. Some reports say he has already sold over half his stake, so I am not sure this Singaporean move does that much for him. There are plenty of ways to shelter money in the United States (http://www.forbes.com/sites/deborahljacobs/2012/03/20/how-facebook-billionaires-dodge-mega-millions-in-taxes/ http://www.forbes.com/sites/deborahljacobs/2012/03/20/how-fa...) and pay basically nothing. Everyone here likes to make the tax burden on US citizens outside of the US sound so horrendous, but my experience is that it is a worst of taxation situation. One gets to exclude the first 95k of income from US, but I think you also can run money through a housing allowance of around $100k depending on the cost of living. Yes, the US tax system sucks, but the weather and disney-like atmosphere in Singapore suck more in my opinion. I think I could have fun living there for a few years, but a lifetime would be hard. The US will definitely consider this a move to avoid taxation. He will probably never be welcome again in the US, and essentially becomes a pawn in international extradition should some US administration in the future have a point to prove. If it were me, I would just dump a ton of money behind Ron Paul.

wissler 14y ago

Saverin's case is potentially misleading. Many American citizens living abroad are under great hardship caused by the US tax system following them around the globe. The United States is the only developed country in the world that harasses its citizens for taxes on wages earned in foreign jurisdictions. E.g.: ""It makes absolutely no sense," said Senator Jim DeMint, Republican of South Carolina, of a system that makes the United States the sole developed country to tax income earned by its citizens abroad." http://www.nytimes.com/2008/04/01/world/americas/01iht-expats.4.11594315.html http://www.nytimes.com/2008/04/01/world/americas/01iht-expat...

9999 14y ago
You can exclude $92,900 worth of foreign income from U.S. taxation (and another $92,900 for your spouse).
- wissler 14y ago
  So?

9999 14y ago

So let me get this straight: rich kid at Harvard gives his bright friend some money to rent servers to run a service that gets popular. Rich kid doesn't contribute any more. Rich kid gets cut out of company because he's not doing shit any more, then sues the company. Company sucks it up and pays him off. Then rich kid renounces citizenship and splits for a tax haven with all of that money, completely avoiding contributing anything further to the environment that made him billions of dollars. And the popular narrative is that Zuckerberg is the asshole? Huh.

citricsquid 14y ago
You're assuming he is leaving for tax purposes. If he doesn't live in the United States why would he retain his citizenship? He could be denouncing it for entirely unrelated reasons, someone stated below that to get citizenship in Singapore you must be a citizen of only Singapore. Nowhere has it been confirmed, this is all speculation. He hasn't just suddenly "split", he left the US almost 2 years ago. He already paid taxes on hundreds of millions, I really doubt that he hasn't paid his "fair share".
- gee_totes 14y ago
  If you are a US Citizen, you have to pay taxes, regardless of where you live, so I am guessing taxes paid a role in his decision.
  - nsmartt 14y ago
    Would he also have to pay taxes in Singapore? If so, I can see how this move would be acceptable. Even if not, I don't think many would find this unacceptable if he had done this before the mention of the IPO. It's possible that he has been considering the move for a while, and hasn't bothered to go through with it until a significant chunk of his income became at risk.
    - romeodelight 14y ago
      Singapore doesn’t have a capital gains tax. A 15% long-term capital gains tax rate on $3.84B (4% of Facebook), He saved $576 Million by giving up his citizenship and moving to Singapore.

sbov 14y ago

Given the exit tax, am I the only one who sees this as a risky move? From what I can tell, he's going to have to pay 30% taxes on his unrealized facebook gains. As opposed to 15% long term capital gains. Yeah, it's not publicly traded so they can screw with the valuation, but how will the government take that given liquidity is just around the corner? I'm not an accountant, but this seems like type of scheme that fortunes are lost on. Anyone else more informed have an opinion on the likelihood of him getting screwed over this?

laic 14y ago

So he does NOT support the Warren Buffet Rule?

andr3w321 14y ago

This is becoming increasingly common in recent years. http://online.wsj.com/article/SB10001424052702303592404577362050670738024.html http://online.wsj.com/article/SB1000142405270230359240457736... It's not just having to pay extra tax every year, the mere act of filing a return abroad is headache enough and if you make a mistake you might see jail time.

onetwothreefour 14y ago

This thread is full of misinformed, judgemental, jingoistic BS. What this guy does is none of your business, and I don't think he gives a damn what you think.