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Your Take: Should the US Punish Saverin?

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Last week, before Facebook IPO’d, a lot was made about Eduardo Savarin renouncing his citizenship last November. It was claimed that he renounced citizenship so he could avoid paying capital gains taxes on his share of Facebook, which is pegged to be worth several billion dollars. Politicians jumped on this opportunity to look for ways to bar Savarin from ever returning to the United States (and look for ways to be seen on television arguing for this).

I think this is silly and petty. Especially given word that Saverin said he’d paid the taxes due (whether he actually pays is another issue). The reality is that our tax laws are written a certain way and there’s no reason why someone should pay taxes if they don’t have to. You don’t have to claim mortgage interest, you don’t have to claim your kids, and you don’t have to claim charitable deductions. You choose to claim it because you want to pay less in taxes. You do it because the rules say you can.

The rules, mindbogglingly, say that Saverin can renounce US citizenship and avoid taxes. The rules are clearly broken but you shouldn’t punish him simply because it’s a high profile news story, you should push to fix the rules. Companies do all sorts of ridiculous 1031 exchanges and crazy tax dodges but no one (politicians) does much more than complain. Can you blame them? Those companies make corporate donations. Savarin probably didn’t (not according to Cal-Access). 🙂

What’s your take on this?

{ 24 comments, please add your thoughts now! }

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24 Responses to “Your Take: Should the US Punish Saverin?”

  1. tbork84 says:

    Punished? No. We should actually take a look at changing tax policy that drives individuals to renounce their citizenship to save money. Wouldn’t it make more sense for the US to want to keep wealthy individuals here to pay more taxes in the future. If there was ever a perfect example of killing the golden goose, this is it. Here is the result of “soak the rich” tax policy and where it eventually leads: to the rich getting out and leaving the US with less in the long run.

  2. Frugal says:

    Should not be punished. Why would anyone in the right mind want to stay and more in taxes on his/her hard earned money?

    No wonder the talent is leaving US. If the tax system is not working, we should fix it, not punish the talent.

    • Jim says:

      I don’t think it’s a matter of the system not working, it’s just that people will always try to find ways to reduce their tax burden.

  3. Matt says:

    We need to make a law that if you make money in the US you have to pay taxes on it like a US citizen.

    • Texas Wahoo says:

      If we do make such a law, we should stop taxing U.S. citizens on money they make in foreign countries (which is the reason so many people are renouncing their citizenship these days).

    • Jim says:

      That makes perfect sense and I’m surprised that’s not the case.

  4. Walt says:

    I completely agree with you. A loophole was exposed…don’t waste time going after the person who legally took advantage of it…FIX THE LOOPHOLE!

  5. We Can’t forget the fact that Saverin wasn’t even born in the US. He’s what we call a third culture kid and probably doesn’t view the US as his ‘home’ country even. It was financially advantageous for him to drop the citizenship, so he did it. No problem.

    • shiftomnimega says:

      Exactly, he wasn’t born here, he isn’t a resident here, so getting huffy with him is pretty silly. If he was homegrown and/or still living within US borders, then I’d feel a little differently, but still wouldn’t want him punished.

  6. Megan E. says:

    It’s easier to punish (or pretend to) one individual than a whole business. This is just something to distract people from the real issue – that billion dollar companies do this EVERY DAY and no one says anything since the companies have lobbyists to fight for them.

    I say good for him, I’d have done the same thing!

    The tax laws are very convoluted and should be fixed, but focusing on this guy won’t help anything.

    • Matt says:

      I would find it hard to leave the best country in the WORLD, the best for a number of reasons.

      • Michael says:

        Why do you say the US is the best country in the WORLD. I have lived in Europe and Australia and I can assure you that the US is not the best country in the world. I would like to understand the underlying data that makes you say the US is the best.

        • Matt says:

          The US has the largest GDP, the most elite soldiers (Seal Team 6), a massive nuke arsenal, and it was founded as and still is a democracy. Europe and Australia are not in the same league as the US.

  7. Texas Wahoo says:

    It should also be noted that this guy has lived in Singapore since 2009. It’s not like he left the US just to avoid the taxes.

  8. freeby50 says:

    I don’t know about this.

    If people want to stop being US citizens then that seems like something they should be allowed to do. Once you’re no longer a US citizen then you shouldn’t have to pay taxes to the US.

    I guess all the US should do is bill you for unpaid taxes on assets you own when you’re a citizen. If he pays the taxes then I don’t see any problem here.

  9. I think losing his US citizenship is punishment enough. Do you know how many millions of people are waiting to become US citizens? How many people risk their lives trying to get into the US every year??

    • Frugal says:

      While you are correct that people are eagerly waiting to get US Citizenship, he obviously do not feel as a punishment and that is why he renounced it.

      Am I missing something?

  10. Jerry Chin says:

    What’s to punish? For understanding the tax laws and playing by the rules? In any event, for those who are truly interested in Savarin’s tax situation read this

    To sum up the lawyer talk from that post, Savarin must pay taxes on the value of his assets (including FB shares) as of the date of him surrendering his US citizenship. What he avoids, by renouncing his citizenship, is paying taxes on any future gains in value of his assets when he is no longer a citizen.

    So Savarin did pay taxes on the value of his FB stock as of Sept 2011 when he gave up his citizenship. He will not have to pay any taxes on any gains from Sept 2011 onwards. I hope this clarifies Savarin’s situation for everyone.

  11. govenar says:

    I don’t think he said he’d pay taxes for gains from the IPO when he was no longer a citizen. He said “taxes due on everything I earned while a U.S. citizen”.

  12. Obviously, he should not be punished – these are just laws he’s using in a smart way. MILLIONS of people are doing similar things, let’s punish them, too! But wait, they are not in the today’s News, let’s keep an eye on Saverin!

    Seriosuly. Media should leave this guy alone.

  13. MonkeyMonk says:

    I’m going to do my part and punish him by not seeing the new Spiderman.

  14. I’ll celebrate his good fortune by shorting Facebook.

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