Two senators unveiled legislation on Thursday targeting Facebook cofounder Eduardo Saverin and others who they say have given up their U.S. citizenship to avoid paying taxes.
“This is a great American success story gone horribly wrong,” Sen. Chuck Schumer, D-N.Y., said at a news conference to discuss the bill he is offering with Sen. Bob Casey, D-Pa. “He wants to defriend the United States just to avoid paying taxes.”
The bill would bar wealthy individuals from re-entering the United States and require them to pay a 30 percent tax rate on their U.S. investments if the Internal Revenue Service finds they have renounced their citizenship for tax purposes.
Saverin has said he is giving up his U.S. citizenship, just ahead of Facebook’s initial public offering on Friday. Saverin’s shares in the social networking service are expected to be worth more than $3 billion. Had he stayed a U.S. citizen, Saverin could have a tax bill as high as $100 million, Schumer said.
Saverin, a native of Brazil, told The New York Times earlier this week that his decision to give up his U.S. citizenship had nothing to do with taxes. Instead, he said he views himself as a global citizen.
“If you believe that argument, I have a bridge to sell you,” Schumer said, adding that Saverin’s new adopted home of Singapore has no capital gains taxes.
Saverin came to the United States as a teen and later went on to help launch Facebook with CEO Mark Zuckerberg when they both were students at Harvard University.
“When you have someone like Mr. Saverin, who benefited tremendously from our education system, free-market capitalism and then to take that wealth and avoid taxes in this manner, I think that cries out for some basic justice," Casey said.
Despite their tough words, Schumer and Casey said their legislation is not focused solely on Saverin. Instead, the bill would target anyone with a net worth of at least $2 million or an average tax liability of at least $148,000 who has given up U.S. citizenship in the last decade, a group Schumer estimated to be about 3,000 people. These people would have to prove to the IRS that they did not renounce their American citizenship for tax reasons, he said.
Schumer said while he is “proud of the people who made a fortune at Facebook,” he said most of them recognize their duty as Americans to pay their U.S. taxes.