Eduardo Saverin co-founded Facebook while he was a student at Harvard. Born in Brazil, his wealthy family emigrated to Miami when it was discovered the 13-year-old was on a list of kidnap targets.
Follow this story arc, because you can’t make this up. Rich immigrant kid flees his homeland, gets into Harvard, and becomes an almost instant billionaire. Maybe it could have happened anywhere, but it’s a peculiarly American story. As Farhad Manjoo, writing for PandoDaily notes:
“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.
“Would Eduardo Saverin have been successful anywhere else? Maybe, but not as quickly, and not as spectacularly. It was only thanks to America — thanks to the American government’s direct and indirect investments in science and technology; thanks to the US justice system; the relatively safe and fair investment climate made possible by that justice system; the education system that educated all of Facebook’s workers, and on and on — it was only thanks to all of this that you know anything at all about Eduardo Saverin today.”
Saverin sued Mark Zuckerberg over Facebook ownership — Saverin is thought to have provided Facebook’s initial startup money — and settled for the proverbial undisclosed amount. Not bad for two years’ part-time work.
Now Saverin has renounced his American citizenship. He filed his renunciation in January 2011, the severance became official in September 2011, and was reported by the Internal Revenue Service (IRS) in April 2012. Saverin insists he’s been “misunderstood,” that he’s “not a tax expert,” and that he’s “complied with all the known laws” according to an interview with Quentin Hardy, writing for the New York Times.
Never mind that his four percent stake in Facebook will likely bring him close to US$4 billion when Facebook goes public. The 30-year-old billionaire says his move to Singapore — a country with a maximum personal income tax of 20 percent and no capital gains tax — has nothing to do with taxes. It’s merely “more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Saverin’s spokesperson told Bloomberg. Presumably the same spokesperson told Quentin Hardy, writing for the New York Times, that the tax issue “never came up” and the Singapore residency “seemed a lot simpler.”
As Hardy quips, “He declined to say exactly what simplifications the impending billionaire would enjoy, other than the financial ones.”
Assuming the Facebook stock quickly doubles in value — we are, after all, in the middle of another tech bubble — it will bring Saverin’s stock value to about US$8 billion. At the paltry US capital gains tax rate of 15 percent, Saverin saves a tidy US$600 million in taxes.
Josh Marshall, writing for Talking Points Memo, notes that Saverin will have a hard time re-entering the US under any circumstances. Marshall cites Sec. 212. [8 USC. 1182]:
“Former citizens who renounced citizenship to avoid taxation.-Any alien who is a former citizen of the United States 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 is excludable.”
Marshall notes that repeated assertions by Saverin’s spokesperson indicate that Saverin was very much aware of this hitch, hence all the hand-waving about taxes absolutely not being behind Saverin’s decision to renounce his citizenship.
Good riddance to an ungrateful prick. But what Saverin is doing is nothing new and nothing that the super rich and multinational corporations — including Apple — don’t do daily. With many, many more zeroes.
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Don’t let Eduardo Saverin set foot in the US was originally published by ARTS & FARCES internet on Friday, 18 May 2012 at 8:47 AM CDT. Copyright © ARTS & FARCES LLC. All rights reserved. | ISSN: 1535-8119 | OCLC: 48219498 | Digital fingerprint: 974a89ee1284e6e92dd256bbfbef3751 (64.237.45.114)