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    You Can Take It With You

    By Michael Maiello on Wed, 05/16/2012 - 11:37am | Politics

    Eduardo Saverin, something of a villain in the Facebook tale, is about the become a billionaire, assuming the social network's initial public offering, scheduled for this week, is successful.  From the $15,000 he invested to help Harvard classmate Mark Zuckerberg pay for servers, Saverin will get an estimated $4 billion payday.

    The young investor, born to a wealth Brazilian family but raised in Miami as a U.S. citizen, is taking his fortune to Singapore, where he now resides.  Saverin publicly renounced his U.S. citizenship last week.  Some suspect he's dodging taxes (he'll pay an exit tax but there are no capital gains taxes in Singapore) but his spokesman says he wants to be free of regulations governing what projects around the world U.S. individuals can invest in.

    My column for The Daily today explores whether or not Saverin is "Going Galt," and to what extent our taxes and regulations might actually drive wealthy investors out of the country.  It was one of those columns where the conclusion presents itself as you lay our your arguments.  We treat rich people very, very well in the U.S.

    It's amazing to me how often that fact gets lost in these discussions.  Is there really a better place on Earth to be wealthy?  Sure, your dollars might stretch farther in various developing countries, but doesn't the rule of law that we have here come in handy?  Some of Venezuela's elite, for example, were taken quite by surprise by the ascendency of Huge Chavez.  Anyone living in Singapore has to realize that they are, ultimately, not living in a rights-driven democracy.  The police can stop anyone, at any time, for example, and administer a drug test.  Paris Hilton would not fare well there full time.

    Another thing that didn't occur to me until now, which is too bad, is how did the Brazilian investor get U.S. citizenship in the first place?  His parents brought him here because they learned that he was a kidnapping target in Brazil.  They came here seeking safety.  But the U.S. does not let all people seeking safety take up permanent residence.  For the average non-American, getting permanent residence and a path towards citizenship takes years and is no sure thing.

    But, the U.S. lets rich people move in and their children can apparently get a citizenship to renounce.  Which is sad because if you're like most people in Saverin's situation, and your parents have to come to the U.S. illegally but you go to high school and college here and are culturally American, you can still be deported.

    It's very difficult to watch Saverin thumb his nose at something so coveted by the less fortunate masses.

    Topics: 
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    Comments

    I've often thought that it would have been best to be wealthy in the time of Sherlock Holmes. You could tramp anywhere in your deer stalker hat, be treated like a Lord at the nearest public house and haughtily drop a few coins in payment. No one but Professor Moriarty would dream of bothering you. America has the problem of well-armed poor people who think they're just as good as the rich, but otherwise is fairly safe.


    by Donal on Wed, 05/16/2012 - 12:40pm

    I hereby render unto you some such or other prize until Richard Day shows up to do it.


    by Michael Maiello on Wed, 05/16/2012 - 1:04pm

    Your last line is an extremely intriguing thought provoker about the whole Second Amendment thingie.


    by artappraiser on Wed, 05/16/2012 - 10:59pm

    I'm so old I remember when this story was about wealthy English rock n' roll stars fleeing the UK for the U.S.A., and not internet start up kings fleeing the U.S.A. for Singapore.


    by artappraiser on Wed, 05/16/2012 - 11:12pm

    I think you missed a big ingredient - the IRS via FBAR and FATCA has greatly increased reporting requirements on Americans abroad and any financial institution that deals with them. 

    The result has been that many institutions simply won't accept Americans as clients now. And if financial institutions won't take your money, a lot of opportunities lost, as well as a headache for those living abroad - you have to find an American institution or brown-bag your currency.

    If you have $4 billion to invest, I'm sure the reporting requirements are huge, and if you make any simple mistakes, the IRS has been known to commandeer the whole account. Court fights to then get the money back are often unsuccessful

    Since Saverin was living in Singapore already, and the US taxes him on worldwide income, the decision to give up citizenship was probably easy. (No need to give up his Brazilian citizenshp)

    Saverin came to the US in 1992 and got citizenship in 1998 - presumably either the lottery or just waiting in line and following the rules.

    Congress has treated expats poorly over the last decade or more - changing regulations to tax more on investment income, etc. Part of this was done when Republicans thought anyone out of the country was likely a liberal, so they got their punitive joys out of this. Part is simply expats don't usually vote in local elections, so can't vote out the congressmen that bleed them.

    Theoretically the reporting laws are for people like Romney who have hidden bank accounts in Switzerland, not an American who's a French resident going to language school in Montpelier and has to have an account to pay the bills. But nope, anything more than $10K and you have to be on the IRS' list.

     


    by PeraclesPlease on Thu, 05/17/2012 - 9:59am