I’ve been in contact with a columnist who asked me what I thought about Eduardo Saverin’s expatriation. I respond as follows:
Eduardo Saverin has exercised his unalienable right to renounce his US citizenship. This right is enshrined in the Declaration of Independence of the United States, the Ninth Amendment of the United States Constitution, the Expatriation Act of 1868, the Freedom of Emigration in East-West Trade, and the Universal Declaration of Human Rights, which for its part declares (Article 15, 2):
No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.
Yet for exercising a fundamental right, some in the media have vilified Eduardo Saverin. I suppose because he is rich, and the rich today, because of class warfare, are open targets of abuse and defamation. But I understand why Saverin expatriated. I am not rich, but I sympathize, nay I identify with his desire to shed US citizenship. I have done it too.
Saverin remains a citizen of his native Brazil. Brazil doesn’t tax Saverin’s world-wide income; yet the United States was doing that, even though he now lives in Singapore. Did you notice whether he also renounced his Brazilian citizenship? Not a chance. But with US citizenship comes (1) onerous tax filing requirements; (2) invasive bank account reports; (3) the possibility of being locked out of business deals because foreigners don’t want to be partners with an American on account of invasive filing requirements; (4) inheritance tax claims by the IRS when you die and a foreign spouse may have to deal with this unjustly (I think of my own wife). The only benefit of citizenship to an expat is the right to move back to the United States whenever you want. But if you omit doing your filings, then you feel like a fugitive anyway. I will worry about this until the IRS finally decides that my filings are adequate. It is a chilling feeling that a tax bureaucracy has the final say on whether I am welcome or not in the United States. A guy like Saverin can afford the tax professionals–most of us can’t–for an increasingly complicated and oppressive set of rules for those who live outside the borders of the United States. But why bother to continue doing these filings if you don’t really plan to live in the United States again?
Another question we should ask is, “Why did Saverin move to Singapore?” Perhaps it is because the United States expects the rich to pay all the taxes. According to a 2010 chart, the top 1% of taxpayers in the United States paid 40.4% of all income taxes. I wrote about this, comparing it to the tax burden in Canada. The problem is that the 1% pay a disproportionate amount of the taxes while the top 50% of wage earners pay only 3% of the taxes. Most Americans pay no federal taxes at all. Jim Rogers also lives in Singapore and speaks frequently to the US media with his Southern US accent. Why do billionaires live in Singapore? Perhaps it’s because billionaires are welcome in Singapore. They sure are welcome in the United States too, provided they pay 40% of the total tax burden.
So Saverin moved to Singapore and the United States pursues him there too. He’s got to be thinking that his country of birth, Brazil, didn’t do this to him, why should an adopted country place such burdens on him? And for what? The right to move back to the US? That’s a lot to pay when the United States is just one country and not even the best if you are an investor or entrepreneur.
America didn’t make this man rich. He came from a wealthy Brazilian family. He didn’t need the United States. The United States needed him. He was the one who made Mark Zuckerberg rich with his investment to set up the original servers for Facebook. Americans like foreign capital. That’s why there is zero capital gains on foreign investment in the United States. The tax code is set up such that foreign investors will invest, make their money, and pay no capital gains. Increase the capital gains on foreign investors, get less of their investment. See the conundrum?
The question of why Saverin renounced his US citizenship is easy to answer. The response of his spokesman, Tom Goodman, should be accepted as the truth. I certainly do:
“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Goodman said. Saverin still does hold Brazilian citizenship, Goodman said.
This is also the reason that I relinquished my citizenship: it is more practical to be resident of Canada without US citizenship. I plan to live here for an indefinite period of time.
I became a US citizen at birth. I had no choice in the matter. My question is why Saverin became a US citizen in the first place. Many wealthy investors are asking now whether they should become a citizen or Green Card holder and are responding, “No thank-you.” The tax consequences of such an act has now made becoming an American citizen unattractive. And the media rhetoric doesn’t help either. Now that the press has decided to excoriate Saverin with the 1% rhetoric, the US can start kissing foreign investors good-bye forever. An example the media’s response is the LA times piece by Yale law professor Bruce Ackermann. Ackermann wants to turn the United States into the worst place in the world to be an ex-citizen–placing a permanent ban on those who relinquish their citizenship; it is a vindictive, populous article, that doesn’t even take into consideration the ramifications of what it says. It is the same sort of attitude that caused Britain to fight against the colonists who declared their independence–i.e., such measures would be tyrannical, and it is chilling that a law professor, who is supposed to be a smart guy, would write such a piece of demagoguery, and thus wish to curtail the right to expatriate.
Ackermann’s proposal is a direct contradiction of the Expatriation Act of 1868 which recognizes the right of expatriation as a fundamental principle of the United States government, insisting that naturalized citizens be treated as native-born citizens. To be sure, this is a rebuke of nations that mistreated naturalized Americans, but now Ackermann wants to abuse those who become naturalized citizens of other countries. Thus, according to US law and international law, the United States must be consistent towards Saverin and all other emigrants, treating them as all other native-born citizens of their respective countries. To do otherwise is to abridge “a natural and inherent right of all people, indispensable to the enjoyment of the rights of life, liberty, and the pursuit of happiness.”
I saw a reader comment accusing Saverin of being like the rats leaving a ship. The analogy is perfectly suited to explain the corrupt, fiscally unsound ship of the American economy which is sinking into a deep abyss. But it is unjust towards Saverin. He is no rat. He has exercised a fundamental right. He is a citizen of Brazil. And he is now what Obama once claimed to be, a citizen of the world. He has only shed his citizenship of the United States because it is an excessive and unreasonable burden upon his freedom as a citizen of the world.
I believe that the American media would do well to take the high road, and instead of rebuking Saverin, they should wish him well and explain to him that if he ever wants to come back again and create another multi-billion dollar company, that he would be more than welcome to do so. Important investors around the world are watching to see how Americans react. Don’t screw it up.
This is a cross post from the Righteous Investor.
Somebody got lost on the Internet and mistook this humble website for the Billionaire Boys Club. Sigh.
Couldn’t help bursting out into laughter when I read the comment by not sorry to lose you. Boy oh boy. Another one who either can’t read or interprets what he/she reads through a red, white & blue extra heavy-duty filter.
“Justifications of why you are better than others and deserving of your riches” – that’s a good one. I wish I actually had some riches to be deserving of!
@not sorry to lose you,
We absolutely know you are not sorry to lose us and it is also apparent that you don’t read or research anything behind the mainstream headlines before screaming drivel.
There is a difference between “accidental place of birth (born in a country like the USA by accident) and residence or naturalization in any country (CHOICE). How much fairer, simpler, better for every country than what the USA imposes, along with its citizenship-based taxation and reporting.
I thought that one ideal of American exceptionalism was its FREEDOM. That includes freedom for one to leave. And, it is NOT usually about taxation. The tax evaders you will find living in the USA, sending their money to offshore havens or even state-side havens, for example, Delaware.
Do some research before you condemn innocent people / families, many of whom have lived in other countries for decades and live on a day-to-day basis just as people who chose to immigrate to the US or to stay there where they were accidentally born.
I continue to have such a hard time comprehending how so many homelanders wear blinders and cannot recognize what the concept of American exceptionalism does to the country they do cherish.
It seems more sensible to search for answers; find out what is going wrong in the USA and problem solve to turn things around before it is absolutely too late.
Recognize that other countries may offer some very sensible solutions, beginning with taxation and reporting based on residence (CHOICE) as done in the rest of the world. The US chooses to continue theirs on citizenship (i.e, ACCIDENT OF BIRTH).
“They are Americans. You never were.”
You’ve got that right, sir! I never asked for nor wanted US citizenship due to being born there to parents on student visas. I am 100% Belgian and I resent the US trying to force their nationality on me. Educate your politicians that birthright citizenship is a dinosaur that belongs in the 19th century – Europe has long ago abandoned this outdated practice and the US should as well.
Lastly, you’ll notice that, like every poster above, I live in my home country by choice. I have the option of moving to the US but I have no desire or wish to do so. I certainly did not choose to live here to save on taxes: The income tax tops out here at 57% – A number that I gladly pay as I benefit from services here that Americans could only dream of. I am not a tax cheat – I merely pay taxes to the country whose services I am using and in which I am a legal permanent resident. The US and their arrogant tax laws have no jurisdiction here.
Everyone on this board has exercised their right under the UN Declaration of Human Rights to freely migrate and change nationality as they see fit. They have civic values. They are proud of their adopted homelands. They are good citizens who are by and large middle class and working for a living. Most moved to study, had wanderlust or wanted to see the world and ended up meeting their future spouse and settled down, raising a family in their new countries. Saverin type billionaires are few and far between and give the majority of US expats a bad name. Do your research next time before declaring that anyone who left the US did so exclusively to save on their taxes.
“They pay taxes. They are philanthropists. They are Americans. You never were.”
@not sorry to lose you , your statement you never were is exactally the point. Why should they pay taxes, if they didn’t know they were Americans? If you even took your time and read some of the posts before shooting off your ignorant comment, you would realize a lot of these people ARE paying their taxes, to BOTH countries. Not one of these people have said they are trying to escape paying taxes, they are trying to not be stereotpyed into being labled criminals. And furthermore you would realize that a lot of them don’t want to come back to the US.
Buffet, Gates, and Winfrey having more money than the people on this website isn’t a great point to be making when it isnt even relevant. The amount of money that they have versus the people on this site doesnt matter abecause it isnt about how much money someone has. CLEARLY Buffet, Gates, and Winfrey are aware and always have known they are American. Not really sure what your point is there.
@Not sorry to lose you
Its nice to hear from a Homelander. Are you an American? Are there any Americans left in the Homeland who have taken 20 to 30 minutes to read the Declaration of Independence or Bill of Rights?
Do the words “NO TAXATION WITHOUT REPRESENTATION” ring a bell? Probably not.
How about “GIVE ME LIBERTY OR GIVE ME DEATH?” For sure not.
If Homelanders had any degree of respect for (or even knowledge of) the principles upon which America was founded, 1,788 Americans (mostly ex-pats) would not have renounced US citizenship last year.
A bit of egg on the face, eh? And rightfully so.
Yes! Many of us never asked for US citizenship, like many it has been forced on me. How can citizenship be a thing that is so important that you have to be 18 years of age in order to renounce, but that it can be forced upon a child. US citizenship has been forced on us when we had no capacity to choose. I was told that I would automatically lose the US citizenship by various actions in Canada as an adult decades ago, only to find the rules have changed and the US has decided I am again a citizen. By my count they have given me US citizenship twice now, once at birth and then again when they decided to change the rules.
@Ann, if you live outside of the US the best way to communicate with Congressmen iand senators n Washington is to call their office by phone and expain that you are an overseas constituent and ask if they would please give you the email of a staff member, such as a legislative director, so you can send an email to that person. Bob Casey’s phone in Washington is +1-202-224-6324. If you send a letter through the postal system it taxes about 2 weeks before it reaces the legislator’s office becuase all such mail to them is sent forst to a postal location where it is made certain that tit does not contain any Anthrax or other toxic material. That started back several years ago when some Anthrax was actually sent to several of them with the intention to kill them.
You can also find names and sometimes email addresses of staff members sometimes on their websites.
@not sorry to lose you, What a comedian you are!! You made me die laughing. Stick around this site, you will learn something, because you really don’t know what you are talking about… Ha!! What a Joke!
@all @not sorry to lose you In all fairness, was “not sorry to lose you” talking about us here at IBS, or about the context of this thread i.e. Saverin? I don’t who, if anyone, here Isaac Brock Society is a millionare or billionare. Must of us are middle class people who emigrated from the US some time ago, or are “accidental Americans” who have nationality by birth to foreign parents who were temporarily in the US.
As I have said before, however Saverin’s move might have the tendancy to rub us the wrong way, he exersized his right to renounce his citizenship in favor of his native Brazilian citizenship and Singapore residency as the International Declaration of Human Rights (UDHR) allows. He says he is following all of the exit tax provisions for covered expatriates (as he has more than 2 million). If we take Saverin on his word he is following the law as it is now (the bills being proposed in Congress by people who are reacting viciously to Saverins’s expatriation have not yet passed). No matter how anybody feels about Saverin, we must not stand for vindictive actions that culminate in bills of attainder and ex post facto laws, prohibilted by Article 1 Section 9 of the US Constitution.
If Congress uses the Constitution as a doormat instead of a foundation and referee of federal law and suceeds in further penalizing Saverin by imposing additional exit tax in the form of extended capital gains taxes and/or barring him entry, this will only prevent him from investing his money in the us in the future, and discourage others around the world from bothering to invest the markets of such a vindictive and petty country. If the US wants to be so protectionist of its markets and liquidity, why does it do so much outsourcing to India, Philippines and other places. Why doesn’t the government push companies to use call center services in the US, for example? There are plenty of people looking for a job, and job in the US.
At the same time, in Europe we are still reeling from the domino effect caused by the financial crisis of 2008. I personally have been unemployed for well over a year.
@Petros, At the beginning of this blog you mentioned that Saverin had not renounced has Brazilian citizenship and presuming this to be true I also made comments questioning why he would even consider doing that. He had obvious reasons for renouncing US citizenship, but I did not visulize any valid reason for wanting to renounce his Brazilian citizenship.
However, in checking the Singapore nationality law website, I now realize the Singapore does not recognize dual nationality and that persons who become naturalized Singapore citizens are requred, in accordance with the laws of that country, to renounce other citizenships.
The question which I ask, and hopefully you can answer, is whether such a person is requred to present proof of renunciation of foreign citizenships in order to become a naturalized citizen of Singapore, or whether this means that he must swear to Singaporean authorities, as I believe is still the case with those becoming US citizens that as part of the the sweraring-in oath, the they renounce their former citizenship, even though their former country does not recognize as valid any such declaration to US authorities.
If in Singapore the person swears allegance to Singapore and renounces citizenship in other countries, it may be that this is what is meant by “renouncing” foreign citizenship. If Singapore, unlike Germany for example, does not requre that persons being naturalized present formal evidence from the government of the other country that indeed he has renounced his former citizenship and that the former country confirms that he is no longer a citizen of that country, then is statement to Singaporean authorities might not be recognized as valid under the citizenship laws of the counry of his prior citizenship, unless the former country automatically deprives you of its citizenship if you become a citizen of another country.
If this is the case, then he would still be a citizen of Brazil and subject to all of its laws if he were to visit or return to Brazil, even though Singapore would not consider him to still be a Brazilian citizen. Any light you can shed on this would be appreciated.
@ Roger, perhaps someone in Brazil or Singapore can answer that question. I don’t know the answer. I don’t even know if Saverin became a citizen of Singapore. If he did then his legal advisers suck. He didn’t have to “renounce” his US citizenship; he could have simply relinquished his citizenship.
@Roger and Petros: Singapore doesn’t play around like the U.S. does with its pretend-oath about abjuring all allegiance to foreign princes and potentates. They want an actual certificate from the original country saying you’re no longer a citizen. Most single-citizenship countries with British-derived law demand the same thing. Hong Kong (where we have the Chinese nationality law, but British administrative procedures) has the same requirement in effect too.
Anyway Saverin has said he’s not interested in applying for Singaporean citizenship. Smart choice, in my opinion. Singapore is quite nice to foreign investors, but they treat their own citizens like cattle. When it comes time for him to get married and start a family, presumably he’ll leave Singapore so his kids don’t end up having to serve in Lee Kwan Yew’s army. If he’s a PR, that’s very simple, he can just hand back his blue card. If he’s a Singaporean citizen, it gets more complicated, he’d have to acquire another citizenship and then renounce his Singaporean citizenship. Much simpler just to keep the perfectly-good Brazilian passport rather than go through all that nonsense.
The only real advantage of a Singaporean citizenship for him would be that he could visit Vietnam and China visa-free (perhaps more convenient if he’s investing in startups there), and he’d get a lower rate of stamp duty on his property purchases.
Eric, great comment. Haha, if you have billions, I don’t think you would care to much about $150 dollar-ish visa entry fees. 🙂