11 replies to this topic

[rwac]

This has been everywhere, so perhaps it should be posted here.

Eduardo Saverin, predicting a large profit from the Facebook IPO, gave up his US citizenship in Sept 2011 to save on taxes.
Now some politicians are angry about this, and are proposing to bar him from ever entering the US, via the "Ex-PATRIOT Act"

This brings to mind what Ron Paul said about a Mexican Border Fence. "Every time you think about the fence, think about the fences being used against us, keeping us in.”

Doesn't sound quite so far-fetched now, does it.

Edited by rwac, 19 May 2012 - 12:53 AM.

[niner]

Good. I hope they do keep him out. He used our society (schools, infrastructure, markets, the whole deal) to enrich himself, and now he wants to duck out of his responsibility to pay for it.

[nowayout]

Since a major part of our taxes goes to highly questionable military expenditures and supports human rights violations here and elsewhere, not to mention bailouts and gifts for the 1%, and since Congress refuses to apply the tax income where it is really needed (education, research, and health care, for starters) I would also choose not to support the regime if I had a choice.

Niner, the U.S. imports more foreign talent than it exports. For example, most U.S. universities pretty much rely on foreign students to populate graduate programs in the hard sciences, taking advantage of the better school systems in their home countries. If the U.S. had to rely on our own pathetic investment in public education, the current U.S. advantage in science and technology would collapse utterly. I don't see any senators proposing acts to give the money back to India or China for educating the large number of professionals from both countries now living and working in the U.S. Where does the senate stand on giving South Africa their money back for educating Elon Musk (cofounder of Paypal). Etc.

In any case, Eduardo Saverin is from a wealthy Brazilian family. He was sent to private schools and universities in the U.S. at great cost, thus injecting quite a large amount of money into the country, so he did not benefit from publicly funded education in the U.S. Facebook relies for its success on internet infrastructure in the entire world, only a small part of which is physically located in the U.S. He could not have gotten where he did if not for the Brazilian infrastructure and wealth that allowed his family to pay for him to live here and pay for his education. Where do you stand on giving some of his supposedly owed tax money back to Brazil? After all, Brazil provided the startup wealth in this success story and is getting "screwed" more in this transaction than the U.S.

Edited by viveutvivas, 18 May 2012 - 07:09 PM.

[niner]

There's a lot more to it than Saverin's education. Facebook could not have happened in Somalia. It could not have happened in a lot of countries. No network = no Facebook. No society = no FB. Saverin may be an anomaly, if he is or was a Brazilian citizen, but he's not really the point. The point is that none of these "self made" billionaires really got there by themselves. They did it in the context of an entire society, and they couldn't have done it without that society.

[nowayout]

There's a lot more to it than Saverin's education. Facebook could not have happened in Somalia. It could not have happened in a lot of countries. No network = no Facebook. No society = no FB. Saverin may be an anomaly, if he is or was a Brazilian citizen, but he's not really the point. The point is that none of these "self made" billionaires really got there by themselves. They did it in the context of an entire society, and they couldn't have done it without that society.

I totally agree with you that the rich are rich because of the infrastructure we all provide, and that they are mostly not paying their share in taxes today. But I think that the politicians' (and your) rather vindictive and vicious response is justifiable neither in the particular case of Saverin, who got where he did for the most part not thanks to investment by the the U.S. but rather investment originating from Brazil, nor in the particular case of Facebook, to which the U.S. contributes only a small part of its public infrastructure on which it depends (which is the global internet). I also think that to focus on this one individual while letting their rich friends and corporate donors in the U.S. get away with ridiculously low tax rates, depriving the country of incomparably larger amounts of income than Saverin would have provided, is an incredibly cynical ploy and distraction on the part of these politicians, whom I don't see falling over their feet to promote any kind of Buffett rule, for example.

Edited by viveutvivas, 18 May 2012 - 09:06 PM.

[niner]

I'm certainly not trying to focus on Saverin. I would hope that the law would cover everyone in his situation. I'm in complete agreement that the US tax laws need sweeping changes. Just out of curiosity, what part of my first post was "vicious"?

[nowayout]

I'm certainly not trying to focus on Saverin. I would hope that the law would cover everyone in his situation. I'm in complete agreement that the US tax laws need sweeping changes. Just out of curiosity, what part of my first post was "vicious"?

My point was that his situation is different.

Banning someone from the U.S. for changing their citizenship is in my opinion a hugely disproportionate and vicious response, if you consider that it is one usually reserved for terrorists, mass murderers, and despots (except for the pro-U.S. despots).

You may not be aware of this, but the U.S. is the only country that requires its citizens to pay taxes to the U.S. government based on their world-wide income even if they reside and work in another country (except for some who have special treaties with the U.S. - the rest are taxed double). By your own stated criteria, this at best unfair and at worst theft, since income earned abroad relies on the infrastructure of the host country, not that of the U.S.

This negatively affects the livelihood of many ordinary non-rich U.S. citizens living abroad who might not have all that cash lying around to spare for double taxation by the IRS. Some of them renounce their U.S. citizenship so that they can actually make a living where they choose to work. Others have to renounce their U.S. citizenship as a requirement of assuming citizenship in their host country. Yet they usually have cultural and family ties in the U.S. Banning them from the U.S. would cause much unnecessary hardship and is certainly a vicious response to a non-problem for cynical political gain based on fake "patriotism", while the big tax "cheats" are right here among us buying off the same politicians.

Edited by viveutvivas, 18 May 2012 - 10:47 PM.

[rwac]

sorry for modding you down there niner. accidental click.

[niner]

Banning someone from the U.S. for changing their citizenship is in my opinion a hugely disproportionate and vicious response, if you consider that it is one usually reserved for terrorists, mass murderers, and despots (except for the pro-U.S. despots).

You may not be aware of this, but the U.S. is the only country that requires its citizens to pay taxes to the U.S. government based on their world-wide income even if they reside and work in another country (except for some who have special treaties with the U.S. - the rest are taxed double). By your own stated criteria, this at best unfair and at worst theft, since income earned abroad relies on the infrastructure of the host country, not that of the U.S.

This double taxation does indeed sound unfair; quite ridiculously so, in fact. What's an example of a country, were I both living and working there full time, I would need to pay both US and the local country tax? It would make sense that a person would still need to contribute to Social Security and Medicare if one were maintaining their eligibility in the program. People who give up their citizenship would presumably give up SS and Medicare eligibility, so I see no reason why such people should be punished.

Could this taxation of foreign-source income have been put in place to prevent people from setting up tax avoidance schemes involving paying people through foreign subsidiaries and the like?

[lunarsolarpower]

Let's make a list of annual filing requirements and other implications for US Citizens living abroad:

1040 - in addition to whatever local taxes they must file
FBAR - reporting the maximum balances of all non-US accounts owned or controlled in the previous year to the treasury (if the total of everything exceeds $10,000) - Oh, and check out the penalty for forgetting to file this one: 50% of whatever the max $ amount in the account was for the year.
8938 form - kind of like the above but for those with over $200,000 total assets.

Then there's FATCA - the IRS demanding that every bank in the world submit information on any account held by any American throughout the year. Many banks in smaller countries or countries without significant American presence find this to be too much hassle and refuse to service American Citizens. So I would suspect that by the time this comes fully into effect if it is not modified there will be countries where it is impossible to bank as an American. Imagine how difficult that could make life.

Now we're looking at the Ex-PATRIOT Act.

Considering Saverin only spent a fraction of his life in the US and would have paid a significant exit tax upon renounciation it seems what the sponsors of the Ex-PATRIOT Act are angry about is that he will not continue to be subject to the above bureaucracy for the rest of his life. Actually I'd guess they're more worried that others will start thinking more seriously about the trade-offs to living elsewhere while being an American Citizen. Also it appears that renouncing US Citizenship was free until 2010 when they began charging a $450 fee.

[niner]

FBAR - reporting the maximum balances of all non-US accounts owned or controlled in the previous year to the treasury (if the total of everything exceeds $10,000) - Oh, and check out the penalty for forgetting to file this one: 50% of whatever the max $ amount in the account was for the year.
8938 form - kind of like the above but for those with over $200,000 total assets.

Isn't this true regardless of where you live? If you have money in foreign accounts, you're supposed to report it. They're trying to prevent people from dodging taxes by hiding money in foreign accounts.

[rwac]

FBAR - reporting the maximum balances of all non-US accounts owned or controlled in the previous year to the treasury (if the total of everything exceeds $10,000) - Oh, and check out the penalty for forgetting to file this one: 50% of whatever the max $ amount in the account was for the year.
8938 form - kind of like the above but for those with over $200,000 total assets.

Isn't this true regardless of where you live? If you have money in foreign accounts, you're supposed to report it. They're trying to prevent people from dodging taxes by hiding money in foreign accounts.

But only the US has the muscle to enforce such a law.