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.
Saverin definitely has thousands of times more resources than Petros, Jeff, or probably most of the others here at IBS. He could have dealt with the tax issues had he chosen to stay. If he gets barred, he has the money to fight that, and probably wouldn’t be barred if he continues to invest in the US. I would like to see what sort of documentation the lawyers are putting together to substantiate the claim that the renunciation was not tax-motivated.
I don’t want to create a separate thread for this, but I found the following video very funny in the ridiculous sort of way: http://www.reuters.com/video/2012/04/03/mustached-americans-march-on-washington?videoId=232826364 A bunch of homelanders are asking for facial hair grooming cost deductions. This seems so trivial compared to the issues that we face with FATCA, FBAR and Double Taxation. I suspect that the march portrayed on the film was a sort of practical joke or half-serious. But what I find ridiculous is that a bunch of homelanders are worried about the price of a pair scissors or a razor or wax, shampoo, whatever, and they probably ignore the discrimination that occurs against us US Persons abroad.
Maybe we could get a group of people to march in Washington on our behalf, since it would be very costly for all of us to get together and some of us might be worried about the IRS trying to get the haebeus grabbus on them for refusing to file taxes to the US when already compliant abroad.
They are under the assumption that Eduardo may actually want to go back there. The world is a big place; the US isn’t the only country in the world. Maybe he just got sick and tired of the Patriot Act and so many loss of freedoms.
And here it is … the US is acting like the evil ex-wife who just can’t let go. They should have a warning when you become an American citizen that if you should happen to make alot of money they will trap you inside the country for the rest of your life.
I’m sure Eduardo saved alot on taxes when he moved from Brazil to the US. Brazil didn’t try to hold onto him the way the US is doing.
Senators to Unveil the ‘Ex-Patriot Act’ to Respond to Facebook’s Saverin’s Tax ‘Scheme’
No OMG. I haven’t seen any mention of him in the local papers, and no one is saying anything. My wife said “Yeah, I heard about a Brazilian there… lucky guy.” So there you have it, the US way of seeing things and the Brazilian way.
Personally, I’ll go back to the US after the Patriot Act is repealed. It’s not really the Act itself that that find revolting; it is the underlying thinking, paranoia, fear.. etc..
Seriously, a challenge for everyone: tell me something that is really “special” in the US that you can’t find anywhere else?
Honestly, it’s like McCarthyism round 2. Sometimes I think the US NEEDS a group to demonise and right now it’s the expats. How dare we move overseas and how dare some of us give up our citizenship, no matter what the reason! Traitors!
Can you imagine any other country trying to trap it’s citizens inside without the media being in an uproar about it?
This is a shameful period in the history of the United States.
I think Eduardo should spend some of the millions he’s going to save by suing the US government. Most of what they’re doing to expatriates should be unconstitutional. We know the US government is immoral because almost no other government on earth would even think of doing stuff like this.
@omg
Why would he want to go back? That’s part of the point of renouncing.
https://twitter.com/#!/renounceus/status/203111190728155136
Here is an excerpt describing this absolutely moronic idea:
“At a news conference this morning, Sens. Schumer and Bob Casey, D-Pa., will unveil the “Ex-PATRIOT” – “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” – Act to respond directly to Saverin’s move, which they dub a “scheme” that would “help him duck up to $67 million in taxes.”
The senators will call Saverin’s move an “outrage” and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.”
Question for you Senator Homelander:
How do you intend to collect this?
@all- “a 30% capital gains tax on anyone who renounces their citizenship”. So much for the narrowing of the category of not being a covered expatriat.
In the future you will have to expariate yourself before you begin to embark on making any asset improvements in your life, however modest they may be.
I hope more of the 1% expatriate because then the heat will really get turned on the Democrats. If all of the 1% expatriated, the taxes of every other American would have to go up 66% to make up the loss.
Considering the US government can’t even pay their bills with the 1% still there, they’re going to have Armegeddon on their hands if they don’t stop being so unfriendly to the rich.
I’d hate to see what the unemployment rate will be if all the rich folks leave.
@ Renounce, Yesterday another Brocker took me to dinner–on of the few perks of blogging. Afterwards we mused about whether a new administration would signal an improvement. But it seems to me that even if we have a new president, things are going to get progressively worse, until, our little society will be here at ground zero of a growing protest movement. This is likely to be ten to twenty year trend before it is over, and the result really could be about 6 million renunciations–some people who are still in the US but decide to go back to their home countries, and many like us living abroad already.
I don’t think that the US is going to take my advice and to take the high road. They are taking the lowest road possible. I am beginning to think that being an American is a mental disease.
@Petros, the tide will turn. When their pain becomes unbearable they’ll see the error of their ways.
I’m hoping that a Republican administration will swiftly move to a territorial tax system for corporations and reform the tax code for individuals too. If they don’t the expatriation numbers for the rich have to keep going up because they can’t afford to pay taxes in two countries … once in the country where they actually own businesses and then again in the United States.
@geeez: “Seriously, a challenge for everyone: tell me something that is really “special” in the US that you can’t find anywhere else?”
My family.
Because of technology many business models have died.
If you think of US citizenship based taxation as a business model you have to conclude that it too is on the verge of extinction. It’s time for the US to reinvent itself or die.
I have an Internet company that sells all over the world. I’m amazed at the progress so many countries have made.
I remember a time when you couldn’t make a phone call to India (where I’m originally from) without having to scream into the phone. Now I have customers in India who place orders online with credit cards. The orders ship to them from Canada and the US and arrive within a week.
Half the products I sell are American made and half are made in China.
My American customers are hurting the most right now and I don’t know how people in the US are surviving.
I’m thankful that I live in Canada and our house has appreciated in value since we purchased it in 2009 and that my husband has a well paying job.
The current US administration is flailing. They have absolutely no idea how to help the American people. Talking trash about the rich is something any fool can do.
@ ladyhawk Great point. So this is the challenge to get all the families of the people affected by this nonsense involved. But the family in America is disintegrated and non-cohesive. My sisters think that I’ve gone off the deep end. But if they are unwilling to fight the abuse then they will have to come and visit me. At least my lawyer sister said that they would come to visit me in Canada for that reason.
Also, the Reed Amendment applies to those who renounce their citizenship and not to those who “relinquish”. That’s an important reason that everyone should try to relinquish if possible.
@foxyladyhawk- so the U.S. is building its own version of North/South Korea and East/West Germany but using taxation to make the wall. Expats will be forever separated from the mainlander families?
What shameless extortion.
2012: Congress passes Ex-PATRIOT Act
2013: Congress baffled by plummeting naturalisation rates
http://www.statcan.gc.ca/pub/11f0019m/2011338/part-partie1-eng.htm#h2_5
If the US switches to territorial taxation, the anti-American act of renouncing US citizenship would cease to be a trend. No one on either side of the the story would be having rejection issues. We will go back to being ignored by the US. It will be as it should be.
From the Ex-PATRIOT Act article above:
“The senators will call Saverin’s move an “outrage” and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.”
What does this mean? Can we never be free from these parasites? Is this implying that if you renounce citizenship now even with under the 2 million in assets that you will end up paying capital gains taxes anyway? And what is this about “re-imposing taxes on expatriates”? Does that mean that renouncing citizenship doesn’t do anything and that there would be no way to get out of the US net? I am very alarmed at what is going on.
@Don: this is seriously abusive and outrageous. The US tax code is not meant to be used to punish people you don’t like. This nearly happened after the crash when the CEOs of all the big banks got huge bonuses. Chris Dodd wanted to create new tax legislation to take it all back, and he was furious about it. I don’t care how mad you get, the power to legislate is not the power to punish. Throw these thugs out, they scare the cr@p out of me.
Published a new blog post about the “Ex-Patriot Act”. This seems like the new devil to follow.
Hodgen’s page for Sen. Chuck Schumer’s 30% capital gains tax proposal for Ex-Patriate http://hodgen.com/more-self-inflicted-damage-from-the-senate/
http://abcnews.go.com/blogs/politics/2012/05/senators-to-unveil-the-ex-patriot-act-to-respond-to-facebooks-saverins-tax-scheme/
What does this 30% capital gains tax entail? When would it be collected? When an asset acquired before renunciation is sold later on? How is this different from the covered expatriate status that already exists? Is Schumer’s proposal actually going to add something or just make existing regulations even more complex.
@Don Now we have a whole zoo or alphabet soup: FATCA FBAR DATCA CUT Double Taxation, Ex-Patriot what next? When will foreign governments finally tell the US to shut up? They are acting like idiots. No other civilized country behaves this way.
@Jefferson: They’re not civilized. That’s the problem.