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Facebook Co-Founder Gives Up U.S. Citizenship
- scott_s 14y agoSomeone on HN caught that as well: http://news.ycombinator.com/item?id=3944467 http://news.ycombinator.com/item?id=3944467
- laconian 14y agoSome friends of mine are yelling "see? our tax code is pushing capital overseas!" My argument is, that with $4B at stake, even if we had a "reasonable" income tax, people like this would still seek out tax havens where the burden is even lower still.
- DanielBMarkham 14y agoSo you agree with your friends that people act in their best interests, including changing citizenship, when it comes to taxes, you just disagree on the amount of money it would take?
- _delirium 14y agoI don't think it's true for the vast majority of people. Most Americans, including most wealthy Americans, are happy to be Americans, even if they aren't happy about everything in the US. Rejecting your home country for monetary reasons is a fairly drastic action, and only a very small number of people take it. I mean, you don't see Bill Gates moving to Monaco or anything. Not even very-rich people with libertarian politics, like Larry Ellison or the Koch brothers, are itchin' to leave the country. In fact the number is even smaller than the raw number of renunciations. A spot-check at the list of renunciations suggests that most are actually people who in practice ceased to be Americans long ago, or in some cases never were. Some were born overseas to American parents and have never lived in the US; one actor on the list is of Italian origin and moved back to Italy 40 years ago; etc. Apart from a tiny handful of cases, it seems more like formalizing situations that already exist (people who aren't really Americans just making it formal). A number are also people applying for citizenships in countries that don't recognize dual citizenship, who are required to renounce their American citizenship to do so.
- gammarator 14y agoPeople regularly choose against their own best interests due to perceived obligations to family, organization, country, etc.
- gyardley 14y agoSurely the number of people who would renounce their citizenship to save a small portion of their income is smaller than the number of people who would renounce their citizenship to save a large portion of their income.
- cynicalkane 14y agoTo a multibillionaire, the value of retaining American citizenship could easily be hundreds of millions of dollars. Or it might be much lower in that. The degree of which citizens seek tax havens will be proportional to the level of taxation, not a black-and-white yes-or-no thing.
- grandalf 14y agoFor a rich person the costs of moving (and other transaction costs) are far less... arguably if the transaction costs were lower (walk across the border to a waiting job) lots more people would do it at far lower income/tax levels.
- liber8 14y agoI would argue the opposite. To someone with several billion dollars, citizenship probably doesn't matter all that much. To someone with a couple million dollars, having that U.S. flag on their passport does afford a great deal of freedom and security. But, with several billion, you can pretty much buy all the freedom and security you can get.
- shasta 14y agoWe should give people a number of votes proportional to how much money they have, to give wealthy people more incentive to stay.
- clueless123 14y agoThat is a joke right? (I really hope so)
- planetguy 14y agoPersonally I'm in favour of a system where it's done both ways. Most countries have a bicameral legislature in which one branch is a bit of a joke. My idea is that there should be a "House of Representatives" and a "House of Taxpayers", both of whom need to sign off on any bill. In the election for the House of Representatives, everyone gets an equal vote. In the election for the House of Taxpayers, everyone gets a vote precisely proportional to how much tax they pay. That way, the interests of everybody are balanced -- the folks who are affected by a new law and the folks who have to pay for the new law have both signed off on it. It's a pipe dream, I know, but it'd be nice to see a country where the most competent citizens are appreciated rather than punished.
- alain94040 14y agoWhy single-out the taxpayers? Do you also need a house for the poor (they surely are impacted by laws)? What about minorities? Etc.
- waterlesscloud 14y agoThe article also references new changes in US laws that require even foreign institutions holding funds from US citizens to meet very strict reporting requirements on those funds. In response, some institutions are simply refusing to take funds from US citizens rather than accept what they see as the onerous burden of complying with these reporting requirements.
- Matt_Mickiewicz 14y agoIt's common for UK citizens to give up citizenship, prior to an exit in their business and move to Monte-Carlo or Gilbraltar for a few years to avoid capital gains tax. If Facebook blows up on the IPO and the stock value increases 50% or 100% he could easily be saving $500m - $1b in taxes. It's a no-brainer...
- muyuu 14y agoIt's more of a no-brainer when he isn't even American. He "became" an American citizen in record time - arrived in the US in 1992 and was a citizen by 1998. I'd say citizenship was given a tad too lightly.
- blahedo 14y agoHe's 30 now, right? So he arrived at age 10 and was a citizen sometime before 16. The rules are (as they should be) a little different for minors. Edit: dumb math error.
- planetguy 14y agoUS citizenship is a nasty trap from which it is extremely difficult to escape. The US is one of a very small number of countries which will happily tax its citizens on income earned overseas, thus causing them to pay double taxes on everything they earn. This has seriously bad consequences for US competitiveness, in particular: 1. It discourages competent foreign citizens from seeking US citizenship (a greencard is so much better!) 2. It discourages US workers from spending some of their careers overseas, thus reinforcing US cultural insularity and giving competitive disadvantages. Go to any interntional company's office in Singapore, Shanghai, Kuala Lumpur and note that it's filled with Brits, Australians, New Zealanders with very few Americans; this is why. 3. And of course, things like this.
- ojbyrne 14y agoI'm not sure if your greencard comment is ironic, but permanent residents (green card holders) are subject to the same "exit tax" described in the article.
- ebaysucks 14y agoAnd if ever trade with Cuba of many of the countries the US is at war with, you will face criminal charges even long after you have given up your green card. Hong Kong, Singapore, Switzerland. Get yourself a permanent residency in at least one of those three.
- _delirium 14y agoSingapore permanent residents are required to do 24 months of military service, and in addition, show up for annual refresher training every year until they turn 40. I'm currently an American expat who has to file a 1040 once a year, and I would gladly continue doing that rather than spend a bunch of my time in the Singaporean military...
- mahyarm 14y agoI thought that was only for the children of PRs. First generation immigrant citizens and PR do not have to do military service if their over a certain age. And countries with military service requirements have many ways to get out of it.
- wilfra 14y agoHe's going to regret this down the road. Yes taxing on Worldwide income is absurd but not more absurd than giving up your right to live in the US. There will come a day, probably not too far in the future, where being young and rich on a tiny island isn't fun anymore and he's going to want to do something with his life. He's going to be quite sad when doing it in the United States is no longer an option.
- mbesto 14y agoOr like most people who get US visas, they'll just buy their way back into the US.
- MarlonPro 14y agoI don't think he's going to miss anything US :-)
- clueless123 14y agoNot at all, He can still go to the US as a visitor when eer he wants (he just needs a visa), and even long term by applying to be a resident alien.
- wilfra 14y agoThe IRS and State Department (who issues Visas) are well aware of the hack you are describing and the system is already setup to prevent people from doing that. I was an expat for close to 7 years, have friends who renounced and thought long and hard about doing so myself. I can say with great conviction that long term, in my educated opinion, it isn't worth it.
- mcos 14y agoFor the vast majority of the world's population, not being in the United States hasn't been a barrier to doing something with their lives.
- waterlesscloud 14y agoDo you truly imagine this means he has to live on a tiny island? With billions of dollars? The man could easily maintain homes in wonderful places around the world and do whatever he wants with his life in any of them. He's not going to regret this for even a minute.
- leot 14y agoSaverin was born in Brazil and has been living in Singapore for a while. There are also probably psychological advantages to being out of Zuckerberg's shadow. While taxes might have played a role, it's not obvious that this was the principal factor.
- ashconnor 14y ago30 years old. He'll have to do his National Service in the Singaporean army. Edit: Correction. His children would be eligible. Also, Singapore doesn't allow dual-citizenship, so he'll have to give up his Brazilian citizenship (if he had it).
- apendleton 14y agoThe article doesn't say he's establishing citizenship in Singapore; just residency. He presumably will remain a citizen of Brazil.
- ashconnor 14y agoThat makes more sense.
- GFischer 14y agoWhich also has military service (presumably obligatory, though in practice it hasn't been so for some time) http://en.wikipedia.org/wiki/Military_service#Brazil http://en.wikipedia.org/wiki/Military_service#Brazil "While de jure all males are required to serve, numerous exceptions mean military service is de facto limited mostly to volunteers, with an average of between 5 and 10% of those reporting for duty actually being inducted"
- jemeshsu 14y ago> 30 years old. He'll have to do his National Service in the Singaporean army. No he doesn't. First generation new citizens are exempted. His kids will need to.
- igorgue 14y agoI believe he would still keep is green card, I'm not sure though. Also, if you worth more than 250K you can get in the US, and get a permanent resident visa (green card). The only 'benefits' [1] of being an US citizen is, the social security money when you retire, and the right to vote. With that being said, I'm about to start the process to become a citizen. I think everyone should do it if they can, since, you don't know what's gonna happen when we have an immigration hating president. [1] Not sure if social security would have any funds when I, and Eduardo, retire. And, I don't think voting counts in this country.
- jandrewrogers 14y agoThis has been a growing trend for a number of years. Changes in the US tax code, US laws, and the way the US government interacts with foreign banks has made increasingly difficult for US citizens, particularly those with assets, to live outside the US even if they are perfectly happy to pay taxes. Not only are foreign banks no longer willing to deal with Americans living abroad but in some cases complying with the aggressive US laws are in conflict with the laws where the people actually live. Naturally this is very frustrating to people who live overseas or who are married to citizens of other countries. The way the US deals with taxes for Americans living overseas is gross overreach any way you look at it and the increasing difficulty of being compliant with US laws applied to people living outside the country is driving this. No other industrialized country treats citizens living outside its borders in this way and this reflects negatively on the US.
- Aloisius 14y agoYou can't escape US taxation by giving up citizenship. He will have to pay the exit tax instituted in the 2008 Heroes Earning Assistance and Relief Tax Act (HEART) on all unrealized gains he has worldwide because his net worth is likely greater than $2 million. I believe it is set at 30%. As Facebook has announced the strike price, the value of the company and what his tax liability is, already has a very dollar value. There used to be a ten year shadow for giving up US citizenship where you'd still have to pay US gain taxes for 10 years after you gave it up. And the federal government has the incentive and the means to collect on someone who is a billionaire.
- blahedo 14y agoThe article says he actually gave it up last September, so the numbers might have been fuzzier then. Regardless, he's protected from tax on any subsequent rise in stock price. You can't escape past or current tax, but you can "escape" future taxation. On the ten-year tax shadow: How would that even work? If you were no longer a citizen, what claim would the US have on your money?
- rada 14y agoThere is a rule - quite reasonable in my opinion - that if you were to renounce your US citizenship but then come back for more than 120 days (per year) during the first 10 years following your "resignation", you are considered a resident of the US for tax purposes. It is designed to deter Americans from giving up citizenship solely for tax evasion purposes, as opposed to actually moving to another country. I imagine one enforcement mechanism would be the denial of entry.
- alain94040 14y agoPresumably, he would be paying long-term capital gains this year, which is only 15%. Sure, it's 15% of a lot a money, but it's still only 15%. I guess a big part of the reason to give up citizenship is not the tax, but also the fact that he has strong roots outside the US to being with.
- borski 14y agoThe catch here is: good luck getting back in. The US gov't takes notice of this stuff, and it's just good to be aware of the implications for if you ever want to come back to the US. Not saying it's wrong or right (by all means, the less tax the better), but it's important to be aware of the consequences.
- forinti 14y agoBrazilian law says that he should have lost his Brazilian citizenship for voluntarily acquiring the US citizenship (which also requires that you renounce all others). But I guess with so much cash it won't be a problem.
- _delirium 14y agoBoth Brazil and the US have allowed dual citizenship for some years now, so he's fine on that front.
- syedkarim 14y agoThe governments of the US might tolerate dual citizenship, or turn a blind eye towards to it, but legally speaking, it's not allowed; you can have allegiance to only the United States.
- _delirium 14y agoDepends on what you mean by "legally speaking". The citizenship oath does require allegiance to the United States, but unlike in some countries, there is no law requiring naturalized citizens to renounce other citizenships as a condition of naturalization. So both practically speaking and legally speaking, dual citizenship is permitted.
- calloc 14y agoDepends on when it is done ... for example as a child the rules are different for a lot of countries and dual citizenship would be allowed.
- lbrdn 14y agoThe lack of social responsibility is what erks me the most about Saverin's decision. Saverin takes full advantage of the investments and sacrifices made by countless Americans and then when the country asks for him to uphold his obligation as a citizen, he leaves to save a few percentage points. This is a tactic for small thinkers.
- onedognight 14y ago> This is a tactic for small thinkers Quite so. Good riddance Mr. Saverin.
- benmccann 14y agoI feel it's really unjust the way we treat our fellow citizens living abroad. I would hate to be taxed both by the US and the country I was living in. He's already paid very a very large amount of tax for the value he generated while living in the US. Why should he pay US tax for the value he generates while living in Singapore or elsewhere?
- bilbo0s 14y agoImmigrant who only sought US citizenship for financial gain, renounces US citizenship for financial gain. This is not terribly surprising. There is a subset of Immigrants that move to the US, not because they believe in its ideals, but because it is financially advantageous for them to do so. Sometimes it works for the benefit of the US... as in this case. Other times... not so much. On balance, I believe we generally gain more than we lose. Though I have no data to back up that assertion.
- bwb 14y agoImmigrants believe in American ideals more than most Americans. Esp when most americans barely know anything about their own country. How many of us even know the bill of rights by heart? Just because one guy is making a financial decision doesn't mean you blame a large group for some perceived lost of ideals.
- mike626 14y ago"Thanks for all the opportunity. Later, U.S.!"
- urbanturbanguy 14y agoDoes patriotism have anything to do with citizenship? or is the question of acquiring citizenship becoming a function of your financial/carrer plan? (I can see that in a lot of comments here. It is an easy logic too.) In other words is "patriotism" or "nation state" a medieval concept that will, over the next century, morph into the "market-value-ism" or "market-states"? (In the hypothetical "market-value-ism": You will be able to enter exit & participate in civic activities an any place based on the education/wealth that you have &/or the corporation you are aligned with.)
- blahedo 14y agoSee also http://news.ycombinator.com/item?id=3960000 http://news.ycombinator.com/item?id=3960000 .