If the United States were to apply the Reed Amendment against Saverin, it could lead to a constitutional challenge someone who has the pocket change to pay to for one. This could also result in a challenge of the constitutionality of the HEART Act provisions, i.e., the current exit tax.
The other problem with banning Saverin for life is this: He’s a billionaire and the world is a big place. How is this going to hurt Saverin? But it will be a big message to the world that the United States is not the place you want to go if you want to do a business start up. The United States will only hurt itself if it decides to be vindictive towards Saverin.
Renunciation Guide has a good primer on the subject of the Reed Amendment (here and here). There are serious issues of fairness and constitutionality. Above all, the Expatriation Act of 1868 makes it clear that the United States officials must recognize Eduardo Saverin’s right to expatriation as a fundamental principle of the government (based on the language of the Declaration of the Independence). To punish Saverin with a ban from entering the country would thus violate Saverin’s right to expatriate.
@All
I am literally panicking at the moment after learning about all of this. Its just like the day that I found out about FATCA two years ago all over again. I just hope that, since I have nothing in assets (just current accounts at the bank), that they leave me alone when I renounce and that there is some sort of clause to determine who this applies to and to whom it does not. This is absolutely outrageous though for anybody who has built up any assets outside of the US and is not rich, since I imagine that they will just start to apply it to everyone. I am amazed at how vile the US country has become in such a short amount of time.
@Petros: According to Mark Nestmann, the US State Department lumps relinquishers and renouncers into the same category when it comes to the Reed Amendment. It probably wouldn’t hold up in court, but who has the time and resources for a court case? http://nestmann.com/relinquish-or-renounce/
Hahahahahhahahahahahhah!!!!!! (hysterical laughter)
Nestmann writes:
Nestmann’s only distinction regards those who have applied for visa. No challenge has apprently been made against such a ban. For those who become citizens of Canada or other countries that require no visa to enter the United States, this particular failure to make a distinction between relinquishing and renouncing is moot. This is not a lawful or systematic application of the Reed Amendment, but a whimsical decision of a tyranical bureaucrat who’s decided what is and isn’t law. It cannot stand up in court in my view. If Congress wanted to ban those who relinquish, they would have written “relinquish” not “renounce”.
Nestmann is also wrong. When I relinquished I did not pay the $450 renunciation fee. Clearly the State Department does distinguish between the two acts. So this is the way it works: Renouncing is only one way to relinquish US citizenship. It carries more stigma than relinquishing by becoming a citizen of another country, taking a government job in a foreign country, joining a foreign military, or taking a high level position in a foreign government. But it is less stigmatic than committing an act of treason or taking up arms against the United States.
Don’t know if anyone has already linked to, or seen this comment on the story:
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/14/businessinsiderjim-rogers-eduardo-s.DTL
‘Jim Rogers: The Media Is Getting Eduardo Saverin All Wrong — It’s Very Expensive To Give Up Your Citizenship’
Mamta Badkar, provided by Business Insider
Monday, May 14, 2012
@badger, thanks for the link, Jim Rogers is a voice in the wilderness. Maybe someone should send a link to congress, because apparently they don’t know about the exit tax.
I’d like to point out, that instead of the focus only on Saverin, the media – and the authors of the ‘Ex-patriot Act’ ignore the role that – wait for it! – the tax haven state of DELAWARE is playing in the story “On Tuesday, Business Insider published an account describing how Zuckerberg ousted Saverin from the company. According to the report, Zuckerberg cut Saverin out by incorporating a new company in Delaware…” from: ‘Facebook co-founder Saverin targeted by U.S. senators for tax ‘avoidance scheme’’ By Hayley Tsukayama, Thursday, May 17, 9:53 AM at http://www.washingtonpost.com/business/technology/facebook-co-founder-saverin-under-fire-for-renouncing-us-citizenship/2012/05/17/gIQAPFCyVU_story.html
Why Delaware? see:
http://www.corpco.com/why-delaware/
or,
https://www.usa-corporate.com/why-incorporate-in-delaware/
“Tax Savings from using a Delaware corporation or Delaware LLC
No state income tax for Delaware corporations that operate out of state
No business license required for Delaware corporations not operating in Delaware
No inheritance tax on stock held by non-residents of Delaware
No state sales tax on intangible personal property
Shares of stock owned by non-resident aliens are not subject to Delaware tax”
and see;
http://www.metrocorpcounsel.com/articles/18801/delaware-place-incorporation-and-dispute-resolution
“Editor: What are the key considerations for international corporations that wish to incorporate their U.S. operations? Are they tending to select Delaware and why?”
“Steele: If they have a specific U.S. purpose in mind such as a U.S. acquisition, the surviving corporation is more likely than not to be in Delaware for the very same reasons that domestic businesses would incorporate in Delaware. Many international corporations are concerned that incorporation of their U.S. operations would subject them to the federal tax climate and federal regulatory maze that prevails in the United States.”
So; if the lowly ordinary individual born, or living permanently abroad, or an expatriate despairs of the “federal tax climate and federal regulatory maze that prevails in the United States” as cited above, that is not apparently a legitimate reason to complain. But, if you are a domestic US business, or international corporation operating INSIDE the US, it is officially encouraged that you incorporate in Delaware (or other competing state like Nevada) in order to minimize, or avoid state and federal taxes. And that apparently is legitimate.
From: http://www.delawarefirst.org/25075-measuring-impact-carney-jobs-act ……..”Geisenberger said, “Every state can write its own tax laws and some states have changed their tax laws. For those states that sit back and say Delaware is taking income from them, my reaction is, ‘change your tax laws.’”…..”Indeed, many companies still think Delaware when they’re thinking of incorporating. The most anticipated IPO of the century, Facebook, will create yet another publicly traded company with its corporate headquarters in Delaware. The social networking giant “has been incorporated in Delaware since 2004,” Geisenberger said proudly.”
But if an ordinary ‘accidental’ US citizen despairs of the lifelong cost of specialized US tax and bank reporting assistance – in order to report on already reported and taxed assets produced in the non-US country where they live; and in spite of zero or minimal US tax owed – but subjected annually by the US to jeopardy through layer upon layer of potential draconian penalties in multiples of 10,000. – even for inadvertent errors, through incomprehensible reporting requirements – well, that is something that the US seeks to outlaw.
Jim Rogers said:
Peter Dunn expatriated because of the New Berlin Wall:
http://righteousinvestor.com/2010/02/25/the-new-berlin-wall-heroes-earnings-assistance-and-relief-tax-act-2008/
Zero Hedge gets this story right: http://www.zerohedge.com/news/schumer-introduces-ex-patriot-act-will-banish-those-who-renounce-us-citizenship
This may have been mentioned in another thread, so apologize in advance if I am repeating it here… I am soooo far behind in my reading… 🙂
The Economist has a good editorial as a counter to all the hyperbole and stupidity coming out of Congress and some segments of the press let alone the comments I have read.
Did Eduardo Saverin do anything wrong?
Short answer, NO!
http://econ.st/JDY4p6
Conclusion: America should be thankful, not demonizing.
America the department of redundancy department. They already have an exit tax and the Reed amendment to keep people from reentering! Still think that the Reed amendment will never be enforced? My husband had a conversation with our US tax accountant after they had to have a big meeting (of course at our expense) to figure out why the IRS sent us two numbers for the same trust account. During the conversation she mentioned that another client had recently been refused entry to the US because she did not have a US passport.
If it’s on the books, it’s only a matter of time before it’s enforced, especially if it’s related to the US. That place and those people are so prone to emotional outbursts just like they are having over Saverin.
@bubblebustin well, there are so many complex laws in the US that no lawmaker can keep track of what is already on the books and what might be inconsistent with something else.
Ron Paul for president!
A story from the New York Times…
A Facebook Co-Founder Reflects on the Path Forward
http://nyti.ms/J0ZpTH
@bubblebustin “America the department of redundancy department” See Ministry of Silly Walks:
@Jefferson, that was fun. Maybe Schumer should head up the Dept of Silly Talks? Love Monty Python, any fans of Firesign Theater here?
http://taxpol.blogspot.ca/2012/05/civil-society-to-congress-end-anonymous.html
……..”TJN talks about how anonymous incorporation contributes to the US status as a tax haven:
Corporate secrecy fundamentally undermines U.S. laws to combat money laundering and tax evasion, as well as U.S. efforts to tackle global corruption. A recent World Bank report found that the U.S. was a favorite destination of corrupt politicians trying to set up shell companies to access the financial system.”…….
@badger…
Thanks for that link. Think I will make a tweet out of it…
While the IRS offshore jihad continues, the biggest #TAX evasion & fraud using anon Corporations is in U.S.A. http://bit.ly/Ki1ugX #FATCA
@Just Me: Tax Justice Network are on twitter too (@TaxJusticeNet). In my interactions with them I have generally been disappointed. Let’s just say they’re not interested in having any kind of open debate about their positions:
http://isaacbrocksociety.com/2012/05/10/tax-justice-and-tax-compliance/
More spam!!
Thanks, monalisa,
Sometimes a spam or two get through from the thousands that are caught each day and then gone through by administrators to see if there are actually any “real” comments in there (usually not, but sometimes we do catch some that need to be un-spammed).