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Facebook Government The Almighty Buck United States Politics

Senators To Unveil the 'Ex-Patriot Act' To Respond To Facebook's Saverin 716

Posted by timothy
from the why-schumer-is-my-least-favorite-congresscritter dept.
An anonymous reader writes "Sen. Chuck Schumer, D-N.Y., has a status update for Facebook co-founder Eduardo Saverin: Stop attempting to dodge your taxes by renouncing your U.S. citizenship or never come to back to the U.S. again." See this earlier story on Saverin's plan to make the leap out of the U.S. tax system.
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Senators To Unveil the 'Ex-Patriot Act' To Respond To Facebook's Saverin

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  • by Anonymous Coward on Thursday May 17, 2012 @02:32PM (#40031079)

    A) More government/laws

    B) More Taxes

    C) More War

    D) All of the above

  • Not Just Saverin (Score:5, Insightful)

    by WrongSizeGlass (838941) on Thursday May 17, 2012 @02:35PM (#40031103)
    Why target only those evade their taxes by renouncing their citizenship? Shouldn't these politicians take a good look at themselves? How many of them use every loophole (or sneaky, illegal tactic) they can find to evade their taxes? These people are not above reproach. Most, if not all, are just as guilty of evading their taxes.
    • by Anonymous Coward on Thursday May 17, 2012 @02:36PM (#40031129)

      No, they're not. Stop the nonsense false equivocation and handwavy accusations at "politicians" as an anonymous but easily vilified class.

    • Re:Not Just Saverin (Score:5, Interesting)

      by Lynchenstein (559620) on Thursday May 17, 2012 @02:39PM (#40031195)
      And extend this to the "other" people, AKA corporations that do this. Apple, Coke, Microsoft...the list goes on. If you don't like the loopholes, then close them. But start from a position of honesty and integrity before criticizing others.
      • by Githaron (2462596)
        I simplified tax code would do wonders. No company should need lawyers to look over their taxes. It should be straightforward.
        • A simple tax code, without flexibility in interpretation (which means that IRS just says "no you can't do that" even though there isn't any specific justification in the code), means giant loopholes and tax evasion in practice.

          A substantial fraction of the tax code is the way it is because they are patches done to attempt to preclude diversions of income which were not intended by the simple code.

          All sorts of very simple appearing programs in fact have egregious security bugs in the corner cases.

          • by Githaron (2462596)

            A substantial fraction of the tax code is the way it is because they are patches done to attempt to preclude diversions of income which were not intended by the simple code.

            Because a complicated tax system is working so well for us now. It doesn't matter what the system is. As long as there are those that want to avoid taxes and have enough resources to do so, the system will be gamed. If the system is going to be gamed regardless, it might as well be simple.

      • Re:Not Just Saverin (Score:5, Interesting)

        by squiggleslash (241428) on Thursday May 17, 2012 @02:43PM (#40031253) Homepage Journal

        The easiest way for a corporation to avoid corporate income taxes is to "increase its costs" - that is, hire more people, raise salaries, and generally do all the things a good citizen of a corporation should do.

        Corporate income taxes aren't like personal income taxes. The biggest "loopholes" aren't really bad things.

        • Re:Not Just Saverin (Score:5, Interesting)

          by sandytaru (1158959) on Thursday May 17, 2012 @04:01PM (#40032511) Journal
          Unfortunately, CEOs and CFOs get their jollies by "cutting costs" in order to please the shareholders. "Increasing costs" sounds terrible to your board of directors. The term used instead is "expanding" and/or "growing" or to be really obscure about it, "investing in future growth opportunities." It's the lack of such expansion that caused the recession to stick around for so long, because even the companies that had the capital on hand to continue expanding were afraid to do so in the off chance the economy worsened again. So, it was "keep costs low" to please the financial markets.

          My very Republican, very stalwart conservative father in law went on an unexpected rant last weekend, regarding day traders of all things. He feels that taxes on stocks kept less than 24 hours should be 90% of profits, dropping to 50% after a week, and then back down to standard capital gains after one year. I'd never thought I'd hear such words fall from his lips, but then again he is a player in the long game of the stock markets.
    • by niado (1650369) on Thursday May 17, 2012 @02:44PM (#40031283)
      I'm not familiar with all the details of this particular case, but there is a difference between paying as little tax as possible (everyone should be attempting to do this...) and committing tax fraud.

      I definitely agree our tax system is junk and should not have so many loopholes that are exploitable by huge corporations and the wealthy but I really can't fault anyone for doing whatever they can as long as they are acting within the rules.
      • Re:Not Just Saverin (Score:5, Informative)

        by snowgirl (978879) on Thursday May 17, 2012 @03:21PM (#40031877) Journal

        I'm not familiar with all the details of this particular case, but there is a difference between paying as little tax as possible (everyone should be attempting to do this...) and committing tax fraud.

        In this particular case, the person was born in Brazil, and living in Singapore, and plans to continue to live in Singapore indefinitely. Sounds like the most rational reasons for forfeiting his US citizenship to me.

        And from a legal standpoint, as long as he holds citizenship of some recognized country then he is entirely free to do so. However, individuals who reside in the US, and have no other citizenships anywhere else cannot just renounce their citizenship to dodge taxes, because international law does not provide for the existence of individuals without a citizenship. So, one can only renounce ones citizenship if one already has another citizenship. (US Courts have also held that a US citizen cannot lose their citizenship without willful revocation of it, since the Constitution guarantees your citizenship. So, no act of Congress or other legislative body can dismiss a person's citizenship against their will.)

      • Maybe. But I can tell you that the opportunities for me to "pay as little tax as possible" don't even approach my standard deduction. Maybe if I had the capital to donate a couple cars a year or hire an accountant to go over every purchase or lose the sweet spot amount of cash in Vegas or whatever the hell other small time tricks there are, I might stand a chance at paying a lower percentage tax.

        As it is, I'm pretty much guaranteed to be paying 30% or so. Besides, I don't really want to have to play t
    • Why target only those evade their taxes by renouncing their citizenship? Shouldn't these politicians take a good look at themselves? How many of them use every loophole (or sneaky, illegal tactic) they can find to evade their taxes? These people are not above reproach. Most, if not all, are just as guilty of evading their taxes.

      Tax avoidance is NOT tax evasion. There is a big difference between the two.

  • by Anonymous Coward on Thursday May 17, 2012 @02:35PM (#40031105)

    Like the Soviet Union where you can't leave?

    Or like Nazi Germany, where you can leave, but not bring any of your valuables?

    • by DragonWriter (970822) on Thursday May 17, 2012 @02:53PM (#40031443)

      Pretty much the opposite:

      You can leave, and you can take all of your valuables out of the jurisdiction of the United States, and give up your obligations and rights as a citizen, but once you do, you can't come back or bring any of the valuables back.

  • by amicusNYCL (1538833) on Thursday May 17, 2012 @02:35PM (#40031115)

    The move was likely a financial one, as he owns an estimated 4 percent of Facebook and stands to make $4 billion when the company goes public. ...
    Saverin’s move, which they dub a “scheme” that would “help him duck up to $67 million in taxes.”

    You're telling me he only has to pay 1.6% on $4 billion? Goddamn the rich have it good.

    • Re:Tax rates (Score:4, Informative)

      by hierofalcon (1233282) on Thursday May 17, 2012 @02:41PM (#40031215)

      Reduce taxes by $67 million != only pay $67 million.

    • by Myopic (18616) *

      Indeed.

      "Investment income" is another way of saying "income you don't have to work for". To me, it seems that "getting free money without having to work for it" is enough of an incentive to invest, without also requiring a lower tax rate.

      What America needs is an incentive to work. Let's make sure earned income is taxed at no more than half the rate of unearned income. Let's find whatever rates we need to, to pay for government, and also incentivize working for a paycheck.

      • Re:Tax rates (Score:5, Insightful)

        by Shatrat (855151) on Thursday May 17, 2012 @02:49PM (#40031369)

        Investment income is the reward you get by risking your money by investing in a business. Investing in a business gives them capital to buy assets and hire employees.
        It is not something that should be discouraged, unless your myopia extends to economics.

        • Re:Tax rates (Score:4, Insightful)

          by maccodemonkey (1438585) on Thursday May 17, 2012 @03:12PM (#40031753)

          It's not a matter of not giving investors incentives. It's a matter of giving them reasonable incentives, then them turning around, giving you the middle finger, and not paying their fair share after being giving major tax breaks and government protection.

          Just because you're wealthy or a large corporation doesn't mean you get to skimp on your share of the check when it's your turn to pay up.

        • by Bob9113 (14996)

          Investment income is the reward you get by risking your money by investing in a business ... It is not something that should be discouraged

          Agreed. Similarly, having an income-earning job should not be discouraged. However, we tax both types of income, so the fact is that we are discouraging both, in order to fund our government. We can all agree we should cut spending, and in the meantime we have to pay our bills, so we will have to tax things. It is just a question of which things we tax and how we balance

        • Re:Tax rates (Score:4, Insightful)

          by ChatHuant (801522) on Thursday May 17, 2012 @04:07PM (#40032633)

          Investment income is the reward you get by risking your money by investing in a business. Investing in a business gives them capital to buy assets and hire employees.
          It is not something that should be discouraged, unless your myopia extends to economics.

          But the real engine for progress is work, not investment money. Capital by itself doesn't do anything without somebody to use it. However, the people actually doing the work are taxed more on their income than the people who provide the capital, even though they're the actual real creators.

          Nobody denies investment is necessary. I don't however think it's economically or morally superior to live from investments rather that do good honest work. That's why I think taxing income from investment less than income from work is a bad moral choice, and provides all the wrong incentives for society. I mean, what would happen if capital income would be taxed equally to income from work, or perhaps even more? Would the rich stop investing, would they be, as you say, "discouraged"? This won't happen, or they'll lose their capital to inflation. What will happen is more money would go to the real creators, who would then be able to create more - or maybe some of the formerly idle rich would have to enter the work market themselves and actually become productive. Either way the society would be better off, so I can't really see where the bad part is.

    • by SJHillman (1966756) on Thursday May 17, 2012 @02:44PM (#40031287)

      So what you're saying is that $64.0 mil should be enough taxes for any government?

    • by snowgirl (978879)

      The move was likely a financial one, as he owns an estimated 4 percent of Facebook and stands to make $4 billion when the company goes public. ...
      Saverin’s move, which they dub a “scheme” that would “help him duck up to $67 million in taxes.”

      You're telling me he only has to pay 1.6% on $4 billion? Goddamn the rich have it good.

      No... he will still have to pay taxes on the price of Facebook PRE-IPO. But after that, as long as he has citizenship elsewhere, his capital gains are income to his new government, and no longer the US government.

  • by ravenscar (1662985) on Thursday May 17, 2012 @02:38PM (#40031157)

    Senators to drastically simplify the tax system and eliminate loopholes?

    Instead, these two people are going to overreact to the publicity received by this particular individual and create a bill to address him and the people like him (I believe under a couple thousand people over the last few years). It will do little to impact the nation as a whole.

    Imagine if they were to put their effort into fixing the root of the problem...

  • by SteelKidney (1964470) on Thursday May 17, 2012 @02:38PM (#40031171)
    With asshats like Chuck Schumer in office, what makes him think Saverin (and many others) *want* to come back? It's a little like a hotel manager banning you from his hotel after you complain about the fact that someone took a crap on the room's bed.
    • Re: (Score:3, Insightful)

      by squiggleslash (241428)

      Or it's a little like a hotel manager banning you from his hotel after you took a crap on the room's bed.

      Saverin has two points against him, thus far:

      1. He co-created Facebook. Not a cure for cancer. Not an amazing new product that resulted in the net creation of jobs (I don't want to hear that Facebook employs people - sure it does, but so did the websites FB competed against. Job creation? nil.) But a privacy sucking website that was a mere incremental improvement on the sites it replaced.

      2. He thi

  • Sour Grapes (Score:5, Insightful)

    by StikyPad (445176) on Thursday May 17, 2012 @02:38PM (#40031173) Homepage

    Capital gains are already due when you renounce your citizenship. Placing the burden of proof on someone to prove they aren't renouncing for tax purposes is ridiculous, and possibly unconstitutional. Why would I need a "valid" reason to renounce my citizenship? And adding a clause to bar the person from reentry for life is just petty. Blaming people for leaving when we have laws and policies they disagree with is pointing the finger in the wrong direction. Either we don't want those people here anyway, or else we're the problem.

    • The capital gains due when he renounced his citizenship were based on the valuation of his assets at the time of his renunciation last Fall, as opposed to their value following the IPO. Since most people seem to be of the impression that Facebook's stock will increase in value, that means he stands to gain quite a bit since he won't have to pay any taxes based on the increase. I saw one estimate saying that if Facebook's stock doubles before he decides to sell, he'll be saving $600 million in taxes.

      That sai

    • by Dogtanian (588974)

      Placing the burden of proof on someone to prove they aren't renouncing for tax purposes is ridiculous, and possibly unconstitutional.

      Not disagreeing with you, but you have to admit it'd be hilariously ironic for someone wanting to renounce their citizenship- and hence the protection and rights offered by the US constitution- to be relying on that same constitution to do so. :-)

      • Re:Sour Grapes (Score:4, Interesting)

        by shutdown -p now (807394) on Thursday May 17, 2012 @04:59PM (#40033481) Journal

        someone wanting to renounce their citizenship- and hence the protection and rights offered by the US constitution

        The protection and rights offered by the US Constitution apply to all people in US jurisdiction, not just citizens, except where otherwise specified. E.g I'm not a citizen, just a resident; but the courts have ruled that my First and even Second Amendment rights are protected just as much as yours. There's a reason why it says "The right of People"...

  • by i kan reed (749298) on Thursday May 17, 2012 @02:39PM (#40031191) Homepage Journal

    Expatriates from every country have family, friends, and historical ties to the country they came from. Denying visitation for that reason is morally wrong. Moreover I'm universally opposed to bills of attainder and ex-post-facto laws. They were stupid and contemptible back during the ACORN stupidity, and they're still an unreasonable abuse of legislative power now. If this act applies in any way to Saverin, it would be an undermining of the rule of law.

    • by squidflakes (905524) on Thursday May 17, 2012 @02:57PM (#40031523) Homepage

      Which is why this bill won't go anywhere. Hell, it hasn't even been introduced to committee according to the article. I agree with you that a bill designed as a spiteful measure has no place in our code of laws.

    • Expatriates from every country have family, friends, and historical ties to the country they came from. Denying visitation for that reason is morally wrong.

      There's a difference between moving to another country and renouncing citizenship. I honestly do think that when you renounce citizenship you should be told to submit in writing the reason you're renouncing citizenship. You should then be banned from entering the country again until the reason you stated no longer applies, at which point you should be allowed to regain it. This rule would allow you to renounce your citizenship for moral reasons (and hell, 'I believe I'm being taxed unfairly' counts, if i

  • by bkmoore (1910118) on Thursday May 17, 2012 @02:44PM (#40031289)

    As a nation of immigrants, I sometimes wish say China or another major country would try to pull the same thing with their citizens who have emigrated to the U.S. We would hear all kinds of politicians going high and right about human rights and violations of national sovereignty, etc.

    One could argue that what FaceBook co-founder Eduardo Saverin did was unethical, but despite all of that, the right to emigrate and ex-patriate is a basic human right that is enshrined in U.S. and in international law. Punishing individuals who exercise a basic human right is by definition tyranny.

  • by GameboyRMH (1153867) <gameboyrmhNO@SPAMgmail.com> on Thursday May 17, 2012 @02:53PM (#40031459) Journal

    Not that I sympathize with this slimy tax-dodger, but I hope he gets away with it.

    The value of his demonstration on how the rich view the world is worth more to the world (and the American public) than the taxes he owes. I don't want that demonstration stopped.

  • by OrangeTide (124937) on Thursday May 17, 2012 @02:56PM (#40031489) Homepage Journal

    I don't see why we should ever approve visas to any naturalized citizen who renounces their citizenship.
    I don't care about the tax reasons, that's a red herring as far as I'm concerned.
    As far as I know, it was US policy in the past to refuse visas to ex-citizens, it's a good policy and we should continue to have it.

    It is not a right for foreign nationals to visit the US, and visiting can be regulated with almost no restriction (I can't think of any limitations, maybe for diplomats)

  • by evil_aaronm (671521) on Thursday May 17, 2012 @03:02PM (#40031593)
    It's not entirely to avoid taxes - he'll pay those regardless. It's to make it easier to do business in other countries. There have been a few articles on ex-pats, and the legal hoops through which people and foreign banks, in particular, have to jump is ridiculous, if not downright onerous. Some foreign banks have simply refused to do business with Americans because of these stupid regs. It's as if the good ol' US of A owns your ass, even if you're not in this country, or making money, here.

    Schumer - my senator, unfortunately - is just grandstanding, once again, the pissbag...
    • by TubeSteak (669689)

      There have been a few articles on ex-pats, and the legal hoops through which people and foreign banks, in particular, have to jump is ridiculous, if not downright onerous. Some foreign banks have simply refused to do business with Americans because of these stupid regs.

      You mean the stupid regs that were put into place to stop decades of tax evasion?
      I don't understand the kind of thinking that complains about regulations without acknowledging why that regulation exists.

      I'll give you a hint: It started with Swiss banks and their active role in helping US clients to evade US taxes.
      Our government decided it was about time for their evasion to end and we're making sure it doesn't' happen again.
      Hence "these stupid regs"

  • by Dahamma (304068) on Thursday May 17, 2012 @03:04PM (#40031623)

    From 8 USC 1182 - INADMISSIBLE ALIENS: [cornell.edu]

    (E) Former citizens who renounced citizenship to avoid taxation
    Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is inadmissible.

    So, what's the point of the "new" proposed law besides political grandstanding?

  • by SethJohnson (112166) on Thursday May 17, 2012 @03:17PM (#40031829) Homepage Journal
    Since corporations have been ruled to be people by the Supreme Court, I'm excited to see the Democrats finally concoct a distraction for enacting legislation that will ultimately put Dick Cheney's employer in jail.

    Back in 2007, Halliburton was making so much money off no-bid war-related contracts, it moved headquarters out of America in order to avoid paying taxes on all the money it was making from the US government. [go.com]

    Sen. Patrick Leahy, D-N.H., called the company's move "corporate greed at its worst." He added, "This is an insult to the U.S. soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years. At the same time they'll be avoiding U.S. taxes, I'm sure they won't stop insisting on taking their profits in cold hard U.S. cash."

    Very clever Mr. Schumer!

  • by Col. Klink (retired) (11632) on Thursday May 17, 2012 @03:21PM (#40031881)

    Didn't the Beatles move to the US to avoid The Taxman? I guess it's ok to come to the US to avoid taxes, but you shan't dare leave...

  • by tlambert (566799) on Thursday May 17, 2012 @04:27PM (#40032931)

    The government is effectively paying him $67M to take $4B and invest it in Singapore instead of the US.

    More power to him, so long as the government is insisting on getting paid AMT or capital gains now on unrealized income from an appreciated investment which hasn't been sold.

    The problem is that they want their poind of flesh now, rather than waiting for it to turn from an investment into "mall money" (money you can take down to the mall and spend).

    I knew, though not well, a Netscape guy who was a paper multimillionaire when the Netscape IPO happened. In order to make it a long instead of a short term capital gain, and thus pay less tax, he did an exercise and hold, rather than a same day sale. Then the .bomb happened and the stock price tanked. So there he was with a couple hundred thousand in share value, and the government wanted their 35% of the $27M they valued it at at the time the options were exercised.

    Eventually he killed himself, rather than going to Federal (debtor's) prison for tax evasion, since you can't dismiss taxes owed through bankruptcy.

    Capital gains taxes as a matter of public policy are potentially defensible, even though they make you pay taxes on an investment of after-tax income and therefore amount to a surtax, but AMT is just asinine: the government can wait to get its money until I get my money.

    -- Terry

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