On his road to becoming a billionaire, Facebook co-founder Eduardo Saverin took advantage of some of the best opportunities the United States has to offer: a Harvard education, access to wealthy investors, and a justice system that makes investments possible. But as soon as it became clear last year that Saverin would owe the United States government hundreds of millions of dollars in taxes after the company he co-founded went public, Saverin began taking steps to renounce his US citizenship and declare his residency in Singapore, which has no capital gains tax.
His actions have elicited outrage from the public and from a handful of politicians. New York Senator Chuck Schumer and Pennsylvania Senator Bob Casey unveiled a bill that would force anyone who expatriates the country for tax purposes to pay 30 percent tax on future capital gains. The bill would also ban the tax-dodgers from entering back into the United States. Senator Jack Reed of Rhode Island believes the Obama administration already has the power to enforce that travel ban because of an amendment Reed wrote as a House member back in 1996. Reed is encouraging the administration to exercise that power now, even though the law has never been enforced.
It would be worth making an example out of Saverin, particularly because he enjoys such a high profile. It is estimated that over 1,000 people a year renounce their citizenship for tax purposes, and — now, with the added publicity — many others might consider it. The Wall Street Journal recently ran an advice column entitled, “Should You Renounce Your US Citizenship?” and pointed out that, sometimes, “the best tax strategy is simply to pack up and leave.” The government should take enough steps now to ensure that advice doesn’t hold up too far into the future.