Sens. Charles Schumer, D-N.Y., and Bob Casey, D-Pa., unveiled a comprehensive plan Thursday morning to respond to Facebook co-founder Eduardo Saverin renouncing his U.S. citizenship. The lawmakers said that Saverin’s move was a way to dodge paying taxes on profits he was expected to collect when Facebook goes public on Friday.
Saverin, a partial owner of Facebook, has lived in Singapore since 2009 and renounced his U.S. citizenship in September. The senators say the avoidance scheme could reportedly help him duck paying up to $67 million in taxes since Singapore, unlike the U.S., has no capital gains tax. “That amount could increase even further as Facebook’s stock price rises,” the Senators said.
During a press conference on Thursday morning, the senators called Saverin’s move an “outrage” and introduced the Ex-PATRIOT Act (“Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act), which would re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their plan would also bar individuals like Saverin from re-entering the country.
Under the Ex-PATRIOT ACT, any expatriate with either a net worth of $2 million or an average income tax liability of at least $148,000 over the last five years will be presumed to have renounced their citizenship for tax avoidance purposes. The individual, the act says, ”will then have an opportunity to demonstrate otherwise to the IRS by meeting specific IRS requirements. If the individual has a legitimate reason for renouncing his or her citizenship, no penalties will apply. But if the IRS finds that an individual gave up their passport for substantial tax purposes, then it will prospectively impose a tax on the individual’s future investment gains, no matter where he or she resides.”