What do you think of the proposed "Un-Patriot Act"

[Deleted]

Senators to Saverin: Don't come back. Ever.
By Charles RileyMay 17, 2012: 11:49 AM ET

Eduardo Saverin's decision to leave the United States with his money, but not his citizenship, has apparently touched a nerve in the Senate.

Sens. Chuck Schumer and Bob Casey held a press conference Thursday morning on Capitol Hill where they outlined legislation that would prevent the Facebook co-founder from ever returning to the United States.

Saverin, who now lives in Singapore, renounced his U.S. citizenship earlier this year. He will become astronomically wealthy on Friday when his former venture is listed on the NASDAQ. By renouncing his citizenship, Saverin is likely to avoid capital gains taxes on his Facebook shares.

Schumer called Saverin's decision "outrageous" and labeled his tactics a "scheme."

"Saverin has turned his back on the country that welcomed him and kept him safe, educated him, and helped him become a billionaire," Schumer said. "This is a great American success story gone horribly wrong."

Saverin and his representatives insist the Brazilian native did not renounce his citizenship for tax reasons.

"I'm not a tax expert," Saverin told the New York Times. "We complied with all the known laws. There was an exit tax."

Still, it seems likely that the move will help Saverin escape some of the hefty taxes he'd have to pay on his Facebook stake, though it's not known exactly how much of the company Saverin currently owns.

He owned 5% of the company's outstanding shares as recently as 2009, according to "The Facebook Effect," by David Kirkpatrick, but he has sold off some of those shares since then. He was not listed among those owning 5% or more of the company in Facebook's pre-IPO regulatory filings.

The Brazilian-born Facebook co-founder became a U.S. citizen in 1998 and has been living in Singapore since 2009, but the United States requires its citizens to pay income taxes no matter where they live. Saverin, who provided some of Facebook's initial financing, has not played an active role in the company for many years.

Schumer and Casey are calling their bill the "Ex-PATRIOT Act."

The proposal says that if a wealthy American seeks to renounce their citizenship, it will be presumed they have done so for tax purposes, unless the individual can convince the IRS otherwise.

If the person is unable to convince the IRS, they will be subject to 30% capital gains tax on future U.S. investments no matter where they live. Furthermore, they will not be allowed back into the United States. "Period," Schumer said. "They could not set foot in this country again."

[pixy0stix]

The last part is way over the top. There's no way this bill will pass, right?

[bqbride]

Me thinks someone has failed to make the appropriate "donations" (AKA wholesale purchase) of the appropriate politicians.

[emisi]

May 17, 2012 12:56:13 GMT -5 @littlemoxie said:

I don't know the tax laws well enough to get into details, but I will say this.

1. I don't agree with taxing Americans on money they earn overseas. So if a woman moves to Switzerland and makes 200k a year and is supporting kids and paying Swiss taxes, I don't think she should have to pay taxes to the us on the additional 110k past the foreign earned income exclusion.

2. However, I don't have a problem taxing someone on money earned in America. In this case, he earned this money by selling shares of a US company that he helped start while he was in America.

I think we would be idiots for not allowing him (and other rich Americans) not to enter the US again just because they gave up citizenship. They spend plenty while here - we would lose more by thumbing our noses at them like petulant, rejected children.

I would agree with this. We shouldn't ban him, but he should have to pay taxes on the money earned here, as a citizen. Also, I call bullshit on him not moving away to dodge taxes. Please.

[doxies]

Would this really impact that many people? Didn't we have a thread before on the old board about people renouncing their citizenship? It's really just because he is about to have a large capital gains - he already paid income tax on whatever he had to pay while he was a citizen.

Does this really impact the overall budget? Why don't we stop making pennies instead - I think the impact would be the same.

[Deleted]

We have treaties with other countries. So someone working in Switzerland paying Swiss taxes most likley wouldn't have to pay US income taxes

[Deleted]

based on Doxies logic... I shouldn't have to pay taxes on my power ball winnings because I already paid taxes on the $2 I used to buy the ticket.

[doxies]

May 17, 2012 13:37:23 GMT -5 @littlemoxie said:

May 17, 2012 13:33:48 GMT -5 @septimus said:

based on Doxies logic... I shouldn't have to pay taxes on my power ball winnings because I already paid taxes on the $2 I used to buy the ticket.

Yup. Once you pay income taxes, you shouldn't have to pay taxes on anything you do with that money and anything that comes from such use... for EVAH!

I wasn't actually trying to say that. I am thinking that he is becoming a non-citizen prior to the gains. Maybe I am confused.

[doxies]

May 17, 2012 13:49:51 GMT -5 @littlemoxie said:

He is. That's what everyone is so upset by - they think he is trying to dodge taxes. He is saying he isn't. I think he is full of horse shit.

I don't know exactly what the exit tax is; I would bet that it is less than his capital gains would be.

I agree - I am quite sure he is doing it to avoid taxes, but my point was that the number of people who would do this is so small that the tax avoidance doesn't really impact things that much to write an additional law along with a screw you and never come back clause.

[LoveTrains]

May 17, 2012 13:19:03 GMT -5 @littlemoxie said:

May 17, 2012 13:13:33 GMT -5 @septimus said:

We have treaties with other countries. So someone working in Switzerland paying Swiss taxes most likley wouldn't have to pay US income taxes

Yeah, bad example because Swiss taxes are likely higher. But in Dubai or Singapore, where you pay no or lower taxes than the US, you end up paying the US taxes the excess amount.

Or, if you lived in Dubai for part of the year and Turkmenistan for 182 days of that same year and thus don't owe them any taxes because you have to be there for 183 days to owe, you will pay the US the full amount of taxes for that year. (Because Dubai has no income tax and you didn't pay any to Turkmenistan - the US gets it all!)

But I don't really have a problem with those folks having to pay US income taxes. If you think about, being a US citizen abroad means that US protects you and helps you if you get into trouble overseas. The embassies/consulates are there for you. There is a cost to citizenship. If you don't want to pay the taxes on earned foreign income, you are welcome to renounce your citizenship, right?

[heightsyankee]

My short answer- we shouldn't ban him from the states, but the law should be written so that as soon as he steps foot on American soil again (I assume we'd know b/c he would have to apply for a Visa. If he didn't and was caught here, he would be deported and not allowed back anyway), he should be hit with the tax. Win/win?

[heightsyankee]

If we could prove that he was renouncing his citizenship to pay the taxes (which I know we can't) I would suggest the law say that while he is abroad, he doesn't have to pay taxes on income that was earned here. However, if he was to return, he would have to pay the taxes. I mean it's not realistic, but I would see that as the best case scenario to please the greatest percentage of people.

[LLYS]

In 2008 just over 200 US citizens renounced their citizenship. In 2010 and 2011 over 1000 did so in each of those years. The main reason --- financial.

[mrsukyankee]

As an expat, I hate the fact that I have to declare if I have more than $10,000 in a bank account, even if it's a joint one held by me and my British husband...and with the exchange rate, that isn't a huge amount to have there. So that means I have to take my name off all accounts that are over £5000...thus if my DH ever decides to screw me in the future, I'll be shit out of luck because all our savings, etc, will be in his name. The US taxation situation for expats is seriously fucked up.

[wise_rita]

Moxie, just this year they've started "cracking down"/caring about FBAR. It blows, but I highly recommend you get your form in by June 30th if you had any accounts over $10,000 USD in 2011.

I agree with everything you've said in this thread.

Americans abroad are screwed left and right, and it blows goats.

[Deleted]

I wonder how this will effect SIL. She was an anchor baby like DH. Born in the US but then ILs moved back to the UK. SIL has never lived in the US since she was very young.

[secretlyevil]

May 17, 2012 12:18:20 GMT -5 @septimus said:

Schumer and Casey are calling their bill the "Ex-PATRIOT Act."

The proposal says that if a wealthy American seeks to renounce their citizenship, it will be presumed they have done so for tax purposes, unless the individual can convince the IRS otherwise.

If the person is unable to convince the IRS, they will be subject to 30% capital gains tax on future U.S. investments no matter where they live. Furthermore, they will not be allowed back into the United States. "Period," Schumer said. "They could not set foot in this country again."

Ummm....what? I'm not going to say that I believe his antics because I may be naive but I'm not that naive. But really, we're going to make a law about this?