Asher, Uncle Sam Wants You

[The Mad Monk]

To give him your money, dammit!

Senators to Unveil the ‘Ex-Patriot Act’ to Respond to Facebook’s Saverin’s Tax ‘Scheme’

Sen. Chuck Schumer, D-N.Y., has a status update for Facebook co-founder Eduardo Saverin: Stop attempting to dodge your taxes by renouncing your U.S. citizenship or never come to back to the U.S. again.

In September 2011, Saverin relinquished his U.S. citizenship before the company announced its planned initial public offering of stock, which will debut this week. The move was likely a financial one, as he owns an estimated 4 percent of Facebook and stands to make $4 billion when the company goes public. Saverin would reap the benefit of tax savings by becoming a permanent resident of Singapore, which levies no capital gains taxes.

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.

The plan would bar individuals like Saverin from ever reentering the United States again.

“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Tom Goodman, Saverin’s spokesman, told Bloomberg News in an email.

Last year 1,700 people renounced their U.S. citizenship.

http://abcnews.go.com/blogs/politics/2012/05/senators-to-unveil-the-ex-patriot-act-to-respond-to-facebooks-saverins-tax-scheme/

It's like the whole country's turning into California...

[Elok]

If I were a Senator, I would totally sponsor a bill that spelled CONTRIVED ACRONYM. Can't think of what it'd stand for or what it would accomplish, but that would be my top priority as a Senator. Then I'd resign, because being an elected official sucks if you're not crooked.

[Asher]

Only 1700 people? I'm pretty ****ing elite.

I'm glad I beat this system. You get screwed if you remain a US citizen, and you get screwed if you renounce it. Land of the free.

[The Mad Monk]

They're backdating the tax 10 years from the date of approval.

[Asher]

It's only on capital gains?

[The Mad Monk]

Not sure, I'll check around.

[The Mad Monk]

It doesn't look like it's going to hit you, Unless you're doing significantly better than I think you are.

Charles Schumer and Bob Casey, the two U.S. Senators behind the Ex-PATRIOT act — a proposal to go after early Facebook backer Eduardo Saverin and others like him that have renounced U.S. citizenship and are getting out of paying capital gains tax on stock windfalls — have now revealed the details of their plan. We first wrote about it earlier today when the offices of the two senators first announced their intentions.

It’s pretty big: any ex-pat with either a net worth of over $2 million, or an average income tax liability of at least $148,000 over the last five years, “will be presumed to have renounced their citizenship for tax avoidance purposes.” The ex-pat will have to demonstrate to the IRS that this is not the case if it is not. If there is a “legitimate reason” for that person living outside the U.S. no penalties will apply. But if the IRS finds that someone gave up their passport for tax purposes, they will impose a tax on that individual’s investment gains “no matter where he or she resides.”

The rate of that capital gains tax will be 30 percent — the same that non-resident aliens currently pay on dividends and interest earnings.

The tax detailed this act, if approved, will backdate for 10 years after its approval.

Saverin is expected to make at least $3.84 billion when Facebook goes public tomorrow and would have picked up a tax bill of $67 million on it. He has lived in Singapore since 2009, where there is no capital gains tax. In September 2011 he renounced his U.S. citizenship.

“Mr. Saverin has decided to ‘defriend’ the United States of America just to avoid paying his taxes. We aren’t going to let him get away with it so easily,” Schumer said in a statement. “It’s infuriating to see someone sell out the country that welcomed him and kept him safe, educated him and helped him become a billionaire. This is a great American success story gone horribly wrong. We plan to put a stop to this tax avoidance scheme. There should be no financial gain from renouncing your country.”

The senators are being a bit cheesy with their wording here — defriending being Facebook parlance for ditching one of your contacts — but the point is clear: they feel that Saverin, and others like him, are turning their back on America when they avoid paying their big tax bills. (“Ex-PATRIOT” Act is an acronym for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act.)
As long as an individual does not pay his or her taxes under the scheme, he/she will be barred from entering the U.S., forever. Currently people can still come to America, even after renouncing their citizenship. Legislators have been trying to pass a similar measure for years now, although the last act to try to do this — the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 — apparently was written with some loopholes that made it unenforceable. So much for DC power. Makes you wonder if this time they will manage to be more effective.

The senators note that in 2011, 1,780 people gave up their passports — a record number. And there is a sign that this trend is growing: in 2008 only 235 people gave up their passports.

Currently, if people have been found to have given up their passports for tax reasons, they can still come back to the U.S. for up to 60 days every year, and thousands do.

It’s ironic, and probably not a coincidence, that the rise in tax avoidance of this kind is happening just as the U.S. banking system is going through its own wringer and the public tide is turning against the concept of fat cats benefiting from over-bloated markets when average people are finding it hard to make ends meet. Schumer and Casey at least in part seem to be playing to that crowd in this move.

Full summary of the act below:

http://techcrunch.com/2012/05/17/schumer-and-caseys-ex-patriot-act-details-of-how-they-plan-to-get-saverins-67m-and-more/

[loinburger]

It's only on capital gains?

Probably, it's being proposed by Democrats

[The Mad Monk]

Summary of the “Ex-PATRIOT” Act

“Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act

Sponsored by Senators Charles E. Schumer & Bob Casey

I. Current law (Section 877A of the Internal Revenue Code) already provides that any individual who either has:

(a) A net worth of $2 million or more; OR

(b) An average income tax liability of at least $148,000 over the last five years;

and who renounces their citizenship has to pay an exit tax based on the value all property and assets owned by that individual.

The Ex-PATRIOT Act provides that when an individual expatriates for a substantial tax purpose—as judged by the Internal Revenue Service—that individual will be subject to a 30% capital gains tax on future investment gains. Section 871 of the Internal Revenue Code already taxes non-resident aliens for dividends, interest and other items at the 30% rate. The Ex-PATRIOT Act adds capital gains to this mix of taxable earnings. The tax will apply to anyone who gave up his citizenship in the last ten years but only taxes capital gains earned in the USA following the date of enactment.

II. The Ex-PATRIOT Act also provides that if the IRS finds that avoidance of taxes was a substantial purpose of expatriation, the individual who renounced citizenship will be barred from any type of re-entry into the United States. This section requires the IRS commissioner to make a decision regarding tax-avoidance intent for every individual subject to Section 877A who renounces citizenship. It is retroactive and will encompass individuals who have renounced citizenship for the 10-year period prior to enactment of the statute.

Actually, it seems a tad confused. Does the wealth requirement act as a floor for the rest of the bill, or is it the point when tax avoidance is automatically assumed?

[KrazyHorse]

The us is already retarded about extraterritorial taxation. This is just another step in their long term goal to tax everybody who lives outside the us and nobody who lives in it and makes less than a million dollars a year.

[Hauldren Collider]

This is a ****ing idiotic idea.

[regexcellent]

Let's hope the Republicans in the House blow this sky high.

[DinoDoc]

I'm just curious if exile is even a legal punishment.

[DaShi]

Soon we will tax everyone in the world!

[Lorizael]

I'm just curious if exile is even a legal punishment.

In my utopia, there are only two punishments: exile and brainwashing, and the defendant chooses.