Facebook's Eduardo Saverin: I'm not a tax-dodger
Meanwhile, US senators try to get him banned from the US
Facebook co-founder Eduardo Saverin has insisted that he will pay taxes in the US and his decision to change his citizenship to Singapore had nothing to do with the country's more hospitable tax environment.
"I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government," he said, in a statement released to major media and reproduced by The New York Times. "I have paid and will continue to pay any taxes due on everything I earned while a US citizen.
"It is unfortunate that my personal choice has led to a public debate, based not on the facts, but entirely on speculation and misinformation."
Saverin announced during the week that he was renouncing his US citizenship in favour of Singapore, leading to the widespread assumption that he was trying to avoid the tax on his share of Facebook that will come in when the company goes public later today.
Saverin's statement came as his decision met a storm of criticism from US senators. New York Senator Chuck Schumer and Pennsylvania Senator Bob Casey have proposed new legislation specifically in response to Saverin that would hit perceived tax-dodgers with a US entry ban and tax them anyway.
”We simply cannot allow the ultra-wealthy to write their own rules,” Senator Casey said in a canned statement. “Mr Saverin has benefited greatly from being a citizen of the United States but he has chosen to cast it aside and leave US taxpayers with the bill. Renouncing citizenship to simply avoid paying your fair share is an insult to middle class Americans and we will not accept it.”
Under Casey and Schumer's proposed legislation, any expatriate with either a net worth of $2m or an average income tax liability of at least $148,00 over the last five years, will be presumed to have renounced their citizenship to get out of paying taxes. It will then be up to the person to prove to the IRS that they've left the country for good reason or the government will tax their future investment gains no matter where they live.
"The rate of this capital gains tax will be 30 per cent, in keeping with the rate that is already applied on non-resident aliens for dividends and interest earnings," the senators said.
At the same time, Rhode Island senator Jack Reed has written a letter (PDF) to Homeland Security Secretary Janet Napolitano asking her department to ban Saverin from the US. He quotes a 1996 amendment to the Immigration and Nationality Act that renders inadmissible any former citizen who is determined by the Secretary of Homeland Security to have ditched their citizenship for tax purposes.
The Department has successfully addressed other impediments presented by the exclusion of aliens… such as those who have been determined to have engaged in terrorist activities or drug trafficking. I urge a similar and vigorous treatment for the exclusion of expatriates that have renounced their citizenship in order to avoid taxes.
Saverin picked a particularly poor time to decide to avoid a big old heap of tax, as anger at the super-rich around the world has swelled as the less well-off feel the squeeze of the global financial crisis.
Facebook's IPO will value the company at $104bn. Saverin's stake in the social network is unclear since his settlement after Mark Zuckerberg ousted him way back has remained undisclosed, but it's likely to be a considerable amount, since at the time of going to court, Saverin's piece had dropped to 5 per cent. ®