Senators want to block Facebook’s Saverin from reentering the U.S

http://venturebeat.com/2012/05/17/senators-block-saverin-citizenship/

by option_greek • 14 years ago

17 79 14 years ago

mindcrime5• 14 years ago

A better idea would be to deport the Senators to Somalia or Turkmenistan or somewhere, and block them from re-entering the U.S.

cluda01• 14 years ago

How would this help anything?

mindcrime5• 14 years ago

It would be a start. Our government is totally evil, corrupt, and invasive. Anything that takes away from their ability to interfere with things is a Good Thing.

Deport all the Senators, then the House Reps, then all of the judges, the President, Vice President, and then start on the rank-and-file bureaucrats... Oh, how I long for that day.

nirvana5• 14 years ago

Sure, lets keep foreign born past citizens who helped create $100B companies from coming back to the USA. That will show them!

I really don't think we could survive another attack on the order of Facebook!

kemiller4• 14 years ago

I don't think Saverin's contributions are really proportionate to his windfall. But even that aside, yes, it's great that people come to this country to build things. But this country also offers a lot that makes that possible (there's a reason they come here, after all), not least the enforcement of laws and a relatively level playing field, and part of the bargain is that you pay some back when you win.

You could argue that what he's doing now amounts to insider trading.

nirvana5• 14 years ago

You seem to be arguing that he didn't "pay some back when you win". However, as part of the renunciation process you have to be up to date on your taxes, and you have to pay a tax on any money you move out of the USA. Thus he's already paid his taxes.

Now he's a citizen and resident of singapore. He's got a couple investments there. But your claim that he owes the US taxes on what he built in the USA would seem to no longer apply, right? Since he's building the next thing in singapore, wouldn't he owe singaporean taxes?

If he didn't renounce, the US government would be taxing him on the money he makes in Singapore on a singapore business as well. Even though he's no longer benefiting from the "services" provided by the US government.

The US is unusual in the fact that it taxes citizens on their worldwide income. Further, it imposes fairly onerous reporting requirements that make it difficult for US citizens who live outside the USA to conduct business.

Just because he spent 10 years here, doesn't mean the US really deserves a cut of everything he makes for the rest of his life. This is why there's a renunciation process, and he has gone thru that process legally.

cantankerous4• 14 years ago

I think U.S. citizens have, at least, some warranted sense of righteous indignation here. The guy came to the U.S., jumped onboard a company that really couldn't have made it this big anywhere else (at least at the time), takes the money and runs. I think people are generally well within reason to dislike his choices and reform the system to prevent he and others from repeating.

yummyfajitas4• 14 years ago

If a Brazilian interviewed the founders of a company remotely, made a remote angel investment, and the company became a success in the US, should the Brazilian also be obligated to pay individual US income taxes?

If not, what difference does it make that the Brazilian resided in the US for some period of time?

Note that the corporation is still paying US taxes by virtue of being physically located in the US. The issue is whether the investor should pay additional individual income tax on top of that.

victork22• 14 years ago

Why not, after all actions must have consequences. If he wants to avoid taxes and it's legal by all means he should do it. But there should be consequences to his actions, this proposition seems like a possible one (quite extreme though).

I would like to remind all the wannabe rich on HN who believe that one day they will be in his shoes, nobody succeeds alone and your success has a price for the country. For example in the case of Facebook there are more infrastructure costs for the whole internet, additional regulations have to be passed, etc...

PS: Ghostery on Venturebeat: 17 spying widgets found... Not going on that website ever again.

mvkel• 14 years ago

Isn't this completely backwards? Why would you be able to punish someone for doing something completely legal? Do we punish profitable corporations who pay no tax? Of course not; they're abiding by the laws. If you want to prevent this stuff from happening, change the law.

yashchandra5• 14 years ago

exactly. could not agree more

ArtB2• 14 years ago

> If you want to prevent this stuff from happening, change the law.

Isn't that what they are trying to do?

victork22• 14 years ago

No we don't because regulators are always one step before the corporations on taxes.

Actions that you take legally must have consequences too, as long as these consequences are legal the thread of legality has been preserved along the way. It's not a punishment, it's a consequence. I am not born in the US, thus I don't have the right to be the US President, is it a punishment ? No it's simply a consequence.

I would love all people that say that we need to "fix" the tax system instead of making "rich go" to take a step back and get out of their simplistic views. The tax system and a state is infinitely more complex than any company you could imagine. The worst part is that a country sets its own rule and thus has way more responsibility. Moreover higher instances require a state to behave a certain way and prevent certain behaviors. Even worse, external entities such as foreign countries can interfere with internal regulation mechanism (that's what's happening in this case).

The US being a relatively free state cannot prevent any body to abandon a nationality and thus to lower their tax. For most it's an important procedure which allows you to forfeit other nationalities and take a nationality that requires you to have no other nationalities( some countries impose that). Tax evasion is a constant battle because the laws have to guarantee cases like the one I mentioned but they are also used to save money. Thus legislator are constantly fighting a war against tax evasion and this is one example.

Again, your success has a burden on the whole community and we have to pay it. I know why it's so hard to understand here, many of you who see themselves as future entrepreneurs are thinking "Oh gosh, it's going to happen to me one day, I don't like that" and want to fight against it, but really try to see vastness of the complexity of the problem. There is no simple fix.

edit: Changed the phrasing

kcl• 14 years ago

You cannot use legality as a defense for two reasons:

1. By renouncing your citizenship you put yourself in an extra-legal position.

2. The laws are perceived as underdeveloped. That's why the situation has attracted the attention of US senators.

yashchandra5• 14 years ago

"But there should be consequences to his actions"

You mean consequences to actions that he took legally ?

biot• 14 years ago

There are consequences. He no longer gets to vote. He no longer has access to US-funded social programs. There is a long list of things he can no longer enjoy as a US citizen; natural consequences of not being a citizen. It sounds like you support introducing unnatural consequences.

I once visited the US on business and left without purchasing anything more than a meal. If every action must have consequences, what consequences would you suggest for my actions? Perhaps I should be banned from re-entering the US since I didn't contribute significantly enough to the US economy while I was there?

rsanchez13• 14 years ago

Yeah, let's sacrifice individual liberty for larger government revenues, and justify it using class warfare.

Only winner here is Singapore, with a tax policy that makes way more sense than United States tax policy.

seiji2• 14 years ago

Does this mean we can stop Arrington from reentering California too?

boonez123• 14 years ago

Lots of Rich people pay less income tax than the middle working class or even the lower working class. Should we kick them out of the country too, for being intelligent?

Don't we all want to pay less tax? If there was a legal loophole would you do it?

wpietri6• 14 years ago

I don't particularly want to pay less tax. I just want to pay my fair share. Having lived in places with much shoddier governments, I think I get pretty good value on my dollar. So when somebody is trying to dodge their fair sahre, I don't like it.

yashchandra5• 14 years ago

I do not understand the fuss about this. If Saverin gave up his US citizenship legally, plans to live outside the US for many years, who cares what taxes is he avoiding? These senators need to get their acts together and fix the tax code instead.

kemiller4• 14 years ago

If he truly intends to live outside the country and not return here, then what's proposed has no teeth. But it's more likely that he's doing what many wealthy people have done before him, namely renouncing citizenship officially, but continuing to spend as much time as they please in the US. It actually seems pretty reasonable to deny reentry to someone who has left and had a nice windfall as a result. (Perhaps cleaner: demand repatriation of any capital gains as a condition of visa issuance. Assets acquired after the renunciation are of course exempt.)

ABS5• 14 years ago

he's been living and working in Singapore since 2009 and there is no way for a non citizen "to spend as much time as they please in the US". You'd need a Visa that is linked to work and in that case work would be of course taxed in US.

mindcrime5• 14 years ago

It actually seems pretty reasonable to deny reentry to someone who has left and had a nice windfall as a result.

How is it reasonable? What exactly is the USA gaining by this action? How is this making life better for the citizens of the United States?

This is just political bullshit, nothing more, nothing less. The Senators involved are far more harmful to the USA than Eduardo Saverin ever will be.

cantankerous4• 14 years ago

I don't get why people keep saying Saverin filing his paperwork in January 2011 makes it completely obvious that he was not doing this to avoid paying taxes. Facebook was going to have an IPO and the guy was clearly preparing for it.

It may not be illegal, but it sure is disgusting.

wpietri6• 14 years ago

My understanding is that the rule blocking reentry from people who drop citizenship for tax reasons is longstanding. I'm entirely in favor of both the rule and the application in this case.

This goes on frequently within the US, too. A friend of friends made north of $100m in the dot-com bubble on a company that later collapsed. He made his money in SF, but bought a house in Nevada so that he could dodge the California taxes.

It may be legal, but it was a douchebag move, the moral equivalent of going out for a meal with a big group and sneaking out before the check arrives.

yashchandra5• 14 years ago

"the moral equivalent of going out for a meal with a big group and sneaking out before the check arrives."

Not quite. Saverin played a major part in cooking the meal (using your analogy) and deserves his fair share of sneaking out before the check arrives. Heck, he should be paid for making the meal and a thank you!!

wpietri6• 14 years ago

Please. The fellow played a modest early role and was then forced out because he wasn't competent to handle the rest. His was a minor role in a major startup, and he is basically a lottery winner. For which I say: congrats!

Also, you misunderstand restaurants in the same way you misunderstand economies. The guy who chops the vegetables in the 3 months after the restaurant opens should certainly be paid and thanked. But his job only exists because of heavy investment by the restaurateur.

And that sous chef should still pay his taxes just like everybody else, because restaurants are heavily dependent on civic infrastructure.

ArtB2• 14 years ago

Yes but society did a lot as well (for example providing enough free education so that most people are even able to use FaceBook in the first place), and thus they are do their share as well. Instead, he is trying to duck out so that his fair share gets minimised as well.

It's like trying to leave the dinner party and leaving $40 when your meal added up to $43.25 before tip and tax.

seiji2• 14 years ago

You are right. From a few random websites: "In 1996, Congress included a provision in the expatriation law to bar entry to any individual “who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States.”

This section of the 1996 Immigration law, known as the Reed Amendment, added ex-citizens to the list of other “excludables” which includs practicing polygamists, international child abductors, and aliens who have unlawfully voted in U.S. elections."

Avoiding taxes by moving after the fact is an asshat thing to do.

mindcrime5• 14 years ago

Avoiding taxes by moving after the fact is an asshat thing to do

No it isn't. Avoiding paying taxes is the Right Thing To Do. The idea that taxation is just or right is rooted in some ridiculous ideas, like the notion of an "implicit contract" which is a total oxymoron. Contracts are explicitly, well, explicit. The idea that someone drew some lines on a map, gave that area a name and created something called "government" and now have some authority to collect money from anybody who happens to be inside those lines is absolutely absurd.

nirvana5• 14 years ago

There's no evidence he qualifies under that clause. He didn't renounce to avoid taxation, quite the opposite: He was paid up on his taxes and paid an "exit tax" according to the quote in an article I read last night.

The USA requires you to get permission before renouncing. Part of the process of getting that permission is being audited by the IRS to make sure you're up to date on your taxes, and paying an excise tax on the money you're taking out of the country.

The clause you're referring to is for people who sneak money out of the country and then trick the US into "letting" them renounce where the US thinks they are up to date on their taxes but they aren't because they hid the money. There's no evidence he has hid any money, and no evidence that he has renounced to avoid paying taxes.

Unlike most countries, the USA taxes citizens on their worldwide income, no matter where it is earned or where they live. This means that unless you want to be paying taxes to the USA for money earned outside the USA for businesses outside the USA, you have to renounce.

Further, if he sold all his Facebook stock before giving up citizenship, he's already paid taxes on it. If he has kept that stock, then it is still the stock of a US company listed on a US exchange and after it goes public, he'll still have to pay taxes if he sells any shares-- just as any non-US citizen who owns stock on an american exchange does.

I can't see any evidence that he's avoided any taxes by leaving--- except taxes on income he produces outside the USA.... and why would the US have any right to that income anyway?

cft• 14 years ago

California is 20% illegal immigrants, paying no tax at all. Those ones they do not block from entering...

cantankerous4• 14 years ago

Well they probably pay sales taxes, just saying....

Bud3• 14 years ago

This doesn't pass the laugh test, even if you had a source, which you don't.

Have you heard of the sales tax? You might have come across mention of it somewhere. I'll give you a hint. It's around 9% in CA, depending on where you live.

J3L2404• 14 years ago

Most illegal aliens actually pay taxes, as businesses are mostly worried about the IRS not the INS, but aliens can't collect S.S. so it is a net win in that sense. But not a sensible way to run a country.

bking• 14 years ago

I find it funny that the US is acting like a scathed lover when in actuality it was her own restrictive propensities that push him away. GG USA for scaring away another great BF.

mseebach• 14 years ago

The visa rules already say this, as was pointed out by pretty much all news stories at the time. Is there any way this isn't just grandstanding and cheap point-scoring?

http://www.uscis.gov/ilink/docView/22CFR/HTML/22CFR/0-0-0-1/...

nirvana5• 14 years ago

There's no evidence he has hid any money, and no evidence that he has renounced to avoid paying taxes.

analyst74• 14 years ago

What about the hoards of riches who invest in foreign countries?

I mean, they made their money in the US, not just do they use the infrastructure, but also take money from American people directly.

Now they want to send the money out, and help other countries to start businesses and create jobs?! They might as well live in those 3rd world countries themselves, forever!

ABS5• 14 years ago

if they are US citizens they pay taxes in the US even if they do live in those "3rd world countries" 9after having paid whatever taxes they owe to the "3rd world countries"...)

untog• 14 years ago

We shouldn't punish people who take advantage of the US tax code, we should change the codes they take advantage of. But that involves actual work- reaching across the aisle, discussing, drafting and agreeing on law. I'm not in any way surprised that the Senate would prefer to do anything else.

Quasi-related tax rant: I am not a US citizen, but I live here. I want to get a green card (the process for that is another rant entirely). If I get one, I will owe tax on my earnings in any country. Earn £20,000 in the UK? Well, the UK gets a tax cut of that. Oh, and so does the US, for reasons unknown. America is the only country that does this, as far as I know.

Bud3• 14 years ago

"Reaching across the aisle"? Hee. You must not have read much about Republicans in Congress lately. It takes quite a bit more than a little elbow grease and "reaching across the aisle" to get anything real passed these days.

clarky073• 14 years ago

As if the democrats are any better. They still haven't passed a budget in the Senate since Obama has been in office. Both parties suck.

ios84dev• 14 years ago

The US wouldn't get a cut of that unless the exchange rate really sucked and that £20,000 was worth more than $90,000. Plus any UK taxes you paid on it (assuming there is a taxation treaty between the UK and US) are deductible from your US tax liability.

In general you have to either live in a country that doesn't have a tax treaty with the US or not pay taxes on your income in the country in which you reside.

hnwh2• 14 years ago

That is only true for "Earned Income" if he's not self employed. If he's a web contractor for example, he still has to pay self-employment taxes %15.3 of his UK earned income received from his UK clients, EVEN IF HE LIVES IN THE UK... to the US... fair? really?

http://www.irs.gov/publications/p54/ch03.html#en_US_2011_pub...

Jabbles• 14 years ago

Wouldn't this be a retroactive law? Surely it wouldn't apply to him as he renounced his citizenship before the law was made?

rprasad2• 14 years ago

No, the restriction only applies to criminal laws.

Also, having renounced his citizenship and already given up his U.S. residency, he is no longer subject to the protections of the U.S. constitution.

ABS5• 14 years ago

A Brazilian who got US citizenship, helped create thousands of jobs in the US, moved to Singapore in 2009 and effectively lives and works there since then, applied to drop his US citizenship in January 2011 and will pay the exit tax for it will now potentially be subjected to an illegal (re constitution) retroactive law to "punish" him when the main reason (I speculate) he decided to do so is the crazy American legislation that wants expats to pay their taxes twice (abroad and at home) even if they really live and work abroad?

Ah..it's election year

clarky073• 14 years ago

This is political BS aimed at making rich people look bad in an election year and nothing else. As if 60 million means anything at all to our budget. Less than 2k people left last year. At most we are talking about a few billion in a multiple trillion budget. It just doesn't matter. The negatives of not having intelligent businessmen ever come back far outweighs the few bucks we could have taken from them. I'm just going out on a limb, but I suspect facebook has generated more than 60 million for the government so far.

dougb• 14 years ago

I just sent a letter to Sen Casey, one of my senators. I want to know why he is wasting his time on this crap. I can think of a lot of other issues that he should be spending his time on.

kamaal• 14 years ago

Non US citizen here.

I think the senators are taking this personally. More than 'He didn't pay the tax' this is about 'Does US no longer matter that people are renouncing citizenship?'

The fact is rest of world thinks they don't need US or go to US to do big things, anymore. That is something for the Senators to think about.

Senators want to block Facebook’s Saverin from reentering the U.S

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