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?