Facebook co-founder Saverin renounces U.S. citizenship

Facebook IPO

(Associated Press)

A Facebook co-founder has renounced his U.S. citizenship, and some observers say the reason may have to do with the tax bite he’ll face after the social networking site goes public next week.

Eduardo Saverin, 30, stands to reap billions from Facebook’s May 18 stock offering, according to Bloomberg News. Although his original 34 percent stake in the company is now estimated at below 10 percent after a falling out with Facebook, he still owns a sizable chunk of the company.

Saverin, credited with helping Mark Zuckerberg start Facebook while the two were at Harvard University, ranks at No. 634 on Forbes’ list of billionaires, with an estimated net worth of $2 billion. Those billions will multiply after the company’s initial public offering, which prices Facebook’s new stock at between $28 and $35 each.

The IPO, however, will also leave Saverin and many instant millionaires among Facebook staffers owing millions to Uncle Sam and state governments.

Facebook is already estimating that its employees will owe the IRS at least $4 billion. The tax bite for Saverin, however, will be greatly eased now that he’s a citizen of Singapore.

Saverin became a U.S. citizen in 1998 after moving to the country six years earlier, but he renounced his citizenship last September. His name appears on a quarterly federal list of Americans who have renounced their citizenship, the latest group as of April 30. Bloomberg reported a record 1,780 Americans gave up their U.S. passports last year.

Saverin won’t entirely escape Uncle Sam’s reach, however. An international tax expert told Bloomberg that Americans who give up their citizenship still face what amounts to an exit tax on capital gains from their stock holdings. The IRS treats the stock as if it has been sold, even if the investor hasn’t unloaded it.

42 comments Add your comment

The Social Ninja

May 11th, 2012
4:52 pm

Hmmmmm Sounds like rich people’s problems to me. **On to the next story**

Tech '10

May 11th, 2012
4:58 pm

… must be nice..

beachwriter

May 11th, 2012
5:08 pm

Going Galt….can’t say that I blame him. I’m no where rich and never will be, but I say more power to him! It’s HIS money, and the government should not have its sticky hands all over it.

Sunraynews | Top US news

May 11th, 2012
5:11 pm

[...] Gives Up US CitizenshipSan Francisco ChronicleFacebook co-founder renounces US citizenshipUSA TODAYFacebook co-founder Saverin renounces US citizenshipAtlanta Journal Constitution (blog)TechCrunch -Financial Post (blog) -Reuters UKall 161 [...]

A Proud American

May 11th, 2012
5:15 pm

Greedy Traitor!!!!!!

townepark

May 11th, 2012
5:17 pm

If he was a minority there would be all kinds of negative comments.

Brusierbrody

May 11th, 2012
5:27 pm

townepark take off your blinders, there are negative comments. You are just trolling for racist ones.

Bluto

May 11th, 2012
5:28 pm

What a D-bag. The joke is on him, at some point the billions will lose all of their meaning.

Bluto

May 11th, 2012
5:30 pm

For townepark:

That lowlife piece of trash! Go back to the country he is from! He hates the little man and is turning his back on his people.

Did that make you feel better about yourself??

Bill

May 11th, 2012
5:34 pm

Wow. Hey Bluto, or anyone else with the “99%ers”. If I have $1000, why should I be forced to give it to you when you didn’t earn it, I did??

Mr. Thomas Anthony Jones, SR

May 11th, 2012
5:35 pm

Mitt Romney has renounce his United States of America citizenship to avoid filing his 2011 Income tax Returns. He also promised to never beat up any more African-Americans and gays. Good!!!!

Joey M

May 11th, 2012
5:40 pm

I just noticed that nowhere in any of these comments are people calling for a smaller government or a tax system that does not punish the wealthy. No, on here you have a bunch of people that apparently believe Saverin should just bend over and take it because the Federal Government wants him to. I for one say good for you Saverin. I hope to become a billionaire one day too. When I do, I will be renouncing my citizenship too. I love America. I do not believe a bunch of bureaucrats should have their hands so deep in my pockets. It should be regardless if you make $1 or $1 Trillion you should have the same tax percentage. Because unless you dropped out of school in Kindergarten, you can understand how 20% of $1 is much less than 20% of 1 Trillion. Wealthy people pay more because they make more. This whole elitist opinion that a millionaire should pay your share for you because you were too lazy to go to school and educate yourself is insane. You should be ashamed of yourself if you feel this way.

terry

May 11th, 2012
5:42 pm

Good for him. He knows what we are about to get hit w/ on Jan. 1st. Americans currently have approx $12 trillion held overseas b/c of our archaic tax laws & to stay away from this govt that wants to penalize success & just can’t stop spending. No wonder we’re broke & are $16T in debt & have over $100T in unfunded liabilities. I’m glad I’m not younger & have this to look forward to in your life.

Songbird

May 11th, 2012
5:47 pm

Joey M, if we all paid the same percentage I would be fine with that. Unfortunately, that’s not the case under our current tax code. Many of the very rich pay a lower percentage of their income in taxes than the middle class does. You need to educate yourself before commenting because you sound uninformed and stupid otherwise.

greggo

May 11th, 2012
5:57 pm

deport the bitch

Jason

May 11th, 2012
5:57 pm

He may save some money by living in Singapore, he’ll have to put up with their crazy laws. Chewing gum: illegal. Playboy magazine: illegal. Cigarettes not made in Singapore: illegal. Guns: illegal (even starter pistols used for races are illegal). Pocketknives: illegal. Disparaging remarks about religious authority: illegal. Firecrackers: illegal. Freedom of assembly: illegal after 10pm (restricted other hours)

Pay a ton of taxes to Uncle Sam or pay no taxes, the guy is going to have more money than he will ever need. But he’s willing to give up quite a bit of liberty to hold on to that extra unneeded money. That’s his choice to make but I for one wouldn’t want to live in a country where I could be jailed for speaking out against priest who molest children or forgetting that I had a pocketknife on me when I run to the store to buy some milk.

STH

May 11th, 2012
6:03 pm

Say what you want, but the US is the only country in the world that taxes its citizens no matter where in the world they live. A lot of expats renounce cititzenship, not out of any ill-will toward the US, but because they aren’t keen on paying taxes to their chosen country of residence AND the United States. And, no, that’s not ncessarily ‘rich people’. That’s someone moving long-term to, say, England to care for an ailing relative long-term, or moving to a Hong Kong or Paris branch of their American firm and having to pay taxes in both countries because of US taxation laws. I’m all for paying taxes of the land I’m living in, but why should I pay double, if that country isn’t America?

Wondering

May 11th, 2012
6:04 pm

When a person renounces their citizenship, do they have to leave the country? Why are foreigners living in the U.S. not forced to pay their share? They benefit from our economy and infrastructure.

Curzen

May 11th, 2012
6:37 pm

put him on a no-fly list. if his greed is greater than his patriotism he shouldn’t be welcome here.

Atlanta Mom

May 11th, 2012
6:40 pm

S TH
You don’t pay double taxes. There’s this thing called a “foreign tax credit:”
If you earn money overseas and pay taxes overseas, you get a credit on your US taxes.

Dale

May 11th, 2012
7:04 pm

Songbird,

While a few of the rich pay a lower rate, overall, the top 1% pay 24% of their income, those in the top 25% pay just under 15% of their income, and those in the top 50% pay 12.5% of their income.

Funny

May 11th, 2012
7:20 pm

It’s funny how the Facebook founders have all been out there talking about how “The Rich” should be paying more taxes, and how Capitalism is bad. Too bad they don’t practice what they preach.

ABBYSENIA

May 11th, 2012
7:21 pm

Greed!! He wanted to joinand participate in our society to make his money… now he says he doesn’t want to pay TAXES MADE in our society!? Let him go and not recieve ANY SINGLE US privilege ever again. If he gets hijacked by prirates on his way to Asia…let them rescue him…ironically… Singapore is a very SOCIALISTIC country like Japan and very expensive…he will NEED a Billionto leave there!

Calanthe

May 11th, 2012
7:29 pm

Songbird, you are incorrect. The wealthy pay a much higher average percent than the lower 70% of income-earners. Sure, they get a break on capital gains which is how Warren Buffett skates by, but it’s not enough to offset higher tax rates on ordinary income. If you don’t believe this, I invite you to go to irs.gov and peruse the Statistics of Income charts.
They’re a real eye-opener…and anyone who thinks we can balance the budget with higher tax rates solely on the backs of the wealthy IS ignorant.
As the charts show, the US has one of the most progressive tax structures in the world: 49% of all returns filed show o income tax liability at all.

sam

May 11th, 2012
8:19 pm

John Galt????

MCb

May 11th, 2012
8:42 pm

one word = GREED. He is the reason why are country is in trouble. I hope he is deported!

David Weinstein

May 11th, 2012
8:57 pm

Nothing wrong with what he is doing. I renounced my US citizenship and keep my assets in Israel.
The US is a great place to make money, but that’s it. I could care less about being an American. Quality of life in Israel is much better. Plus I can run my companies in the US via trusts and other fiduciaries.

Jack

May 12th, 2012
2:15 am

There are several other countries that tax world-wide income other than the U.S. You don’t pay double tax, you can exempt up to $92,000 or so currently OR you can deduct the foreign taxes paid. As long as you are a U.S. citizen, you are required to FILE taxe returns every year, you won’t necessarily owe.

JLM

May 12th, 2012
6:33 am

Interest and increased stock value after the IPO would easily make up for the initial tax hit. Selfish. He came here and enjoyed himself, but doesn’t want to support the community. Good riddance.

outsider

May 12th, 2012
8:27 am

@Calanthe: Many people commenting are confusing the percentage of tax paid by someone in the top 1% with the tax rate paid by the top one percent. The U.S. does NOT have one of the more progressive tax systems. First, you have to consider all forms of taxation, not just the income tax. You also have to consider payroll taxes, and state and local taxes, which account for more of the total taxation in the U.S. than in most countries. Unfortunately, people like to cherry pick and just look at the federal income tax. Furthermore, one big the reasons it appears to be so progressive is the huge concentration of wealth in the hands of a few people. Mr. Saverin would be paying at the capital gains rate, which is a much lower rate than earned income at the same income level. The U.S. government made a large investment in creating the Internet, and he got rich off it, it seems only fair that he pay his share of taxes. There are also some commenters that seem to think ANY taxation is theft. I would like to know how they think governments should operate… bake sales?

Default Settings 2.0

May 12th, 2012
9:50 am

I am transferring my citizenship to Decatur.

Homer

May 12th, 2012
10:24 am

Singapore is a socialist country. Good luck, Saverin, and I’m severin’ all my ties with Facebook. They made a fortune here in the US and those greedy SOBs can go pound salt.

Zaniqua

May 12th, 2012
12:11 pm

Almost every country on planet Earth has some kind of tax structure so Mr. Saverin will likely get dinged whereever he relocates to. I don’t fault the guy for wanting to put his money beyond the reach of the Obama/Occupy crowd, I might do the same thing. Unfortunately I’ll never have the multi-billion $ motivation to find out.

STH

May 12th, 2012
12:52 pm

Atlanta Mom: Tax credits are nice, but don’t cover everything, particularly when you’re dealing with property and other income. My husband’s paycheck is already heavily taxed (but he’s a native here in Europe, so no big deal.) I don’t see where the US government needs to be concerned with my income sources here, and if I renounce citizenship when I have the chance, it won’t.

And I don’t like FILING taxes every year, regardless of whether or not I owe.

TryMe

May 13th, 2012
9:19 am

@David Weinstein reveals what so many people already know about his community in the U.S. They don’t give a rat’s a$$ about this country. They only care about Isreal. Always have always will. They will however continue to hold the U.S. hostage though, financially that is by dictating and controlling every aspect of its financial policy. What a sucker this country is. And thanks for deleting my first post blog moderator, because it was a bit of truth as well. I expect this one will probably go away though pretty soon too. c’est la vie!

F. Stephen Masek

May 13th, 2012
3:18 pm

Thanks, Joey M for your excellent letter.

TY

May 13th, 2012
5:08 pm

Its amazing how most of the 1% ers and many right wingers like to brag about the U.S. having the greatest military in the world and should continue to have the greatest military in the world but they don’t want to pay taxes to support the greatest military in the world. If you want the greatest of everything in the world and want the U.S. to be the world police it cost money and bottom 90% surely can’t foot the entire bill.

TY

May 13th, 2012
5:35 pm

Better yet let’s just go Third World here in the good ole U.S.A. Everybody pay little to no taxes. That way the U.S. could have a small security force to protect the country, little to no infrastructure for the many successful industries that call the U.S. home. No research or protection agencies and the list go on. This would be such a nice country to leave to our future generations. And we would like to thank the past generation for paving the road for the success some of us enjoy. “Taxes aren’t fair. No one should have to pay them.“

rocky road

May 14th, 2012
7:19 am

All those crying about his renouncing are the ones not paying any taxes anyway. I don’t blame him any. I won’t mind paying taxes when the 50% who don’t pay are required to have a stake in this country. If I were king, if you didn’t pay taxes you would not be voting buddy.

rogy

May 14th, 2012
11:26 am

rich people should pay more…. life is relative….. So if you think that somwone who has to work 2 jobs because of circumstance should pay the same amount of income tax as someone who sits on a yaght making their money from interest should pay the same income tax you are nothing more then a capitalist. Which means you have no problem making money at the expense of others. thats not the way people should be. just my 2 cents

rogy

May 14th, 2012
11:31 am

this guy is just plain F`n greedy……. nice

Norm

May 14th, 2012
12:51 pm

@David Weinstein : Very upset with your comments. Why don’t you move back to Israel right now? Please leave us alone.