Most middle and upper middle class workers in the US pay about 30% in income taxes on their earned income. But CEOs and other wealthy investors pay only 15% on capital gains, mostly real estate and stock. It’s quite a scam. But one young facebook zillionaire won’t even be paying that when he becomes one of the richest people on earth tomorrow:
(c/net) — Critics have charged Saverin with renouncing his U.S. citizenship so he wouldn’t be forced to pay capital gains or estate taxes on the more than $3 billion he’s expected to own in Facebook shares when the company goes public tomorrow. However, Saverin made it clear that his decision had nothing to do with taxes, and everything to do with his view that he’s a “global citizen.”
“This had nothing to do with taxes,” Saverin told The New York Times in a recent interview. “I was born in Brazil, I was an American citizen for about 10 years. I thought of myself as a global citizen.”
Of course not, Eduardo, nothing to do with taxes at all. Eddy Saverin doesn’t mention he fled to the US with his family from Brazil when he was marked for a hit by a local Brazillian mobster. Then he worked with a young Mark Zuckerberg as they both created the proto-type Facebook on a network run by a government subsidized university on an Internet created by US taxpayers and government scientists. But hey, taxes are for the little people …
lol…Congress never really dealt with corporate inversions. I have little faith that they will successfully deal with the richest people any better.
Doesn’t relaly matter if a Senator or two really does want to deal with it, it’s all for show. The GOP would never let that pass, and there would be plenty of dems up for sale too, if need be.
I wonder what the Brazilian tax rate is?(Heads to Google). 27.5% on earned income. 15% on capital gains for individuals. Not counting the 11% of gross salary taken for Social Security.
If it were just that easy — renounce your citizenship and avoid taxes — I suspect there would be a lot more people doing it. Maybe even among the 99% and not just the 1%.
@Kevin – I think people look (or looked, not sure how common it is anymore) at Brazil more as retirement due to lower cost of living (at least in the past).
Note that Saverin went to Singapore to become a citizen which is known for its attractive corporate and personal tax rates.
As someone who is pondering changing citizenship, it is both amusing and alarming to hear the senators talk about punitively “stop[ping] people from renouncing their citizenship to avoid paying taxes” and barring re-entry. Amusing because the U.S. is party to several treaties they would be violating if they enforced this (the right to renounce citizenship is considered a fundamental right by the United Nations, and until the U.S. makes renunciation a felony, visa treaties cover which foreigners can visit the U.S.). Alarming because they may try to do so anyway.
My assets are far below the level that would trigger an exit tax from the U.S., but I’m already required to file taxes on income earned abroad, spent abroad, from a job at a foreign company. At last look, Eritrea is the only other country with this taxation system.
The $67 million that the government says it may lose in Saverin’s case is the difference between the 15% of the value of the stocks that Saverin paid as an ‘exit fee’ when he renounced his citizenship and the 15% of the value of the stocks that he would have paid had he remained a citizen and sold them. It’s a hell of a lot of money, but there are easier ways of avoiding that tax than renouncing citizenship.
Politically, though, it’s a lot easier to dump on ex-pats. We don’t have congressional representatives or senators to call, and we’re not able to vote on most issues. It’s harder to take to task those benefiting from low capital gains rates. After all, they’re not just “job creators”, they’re often potent political donors.
Singapore tax rate is 15%.
He’s going to pay 15% no matter where he goes.