The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age

    When Corporations Renounce Citizenship...

    By PeraclesPlease on Sat, 05/19/2012 - 6:51am |

    If a tree falls in a forest and no one hears it, who brings it a pillow?

    Eduardo Saverin seems to have upset some in Congress, who have put down their bribes and chit sheets long enough to grasp patriotism by both lapels, screaming:

    "someone's trying to avoid taxes!!!"

    Of course even the President says his goal is to lower taxes, so you'd think this would be a shared national priority, kinda like watching "Dancing With the Stars".

    I thought loopholes were written to be used - how else would accountants support themselves? 

    Though our good Congresspeople have decided they'll charge suspected tax exiles at twice the going rate. (Note that tax exiles would have to pay tax on US-earned income anyway, but we can put an arbitrary price on thinking they're having fun).

    So how about all those corporations dodging taxes by leaving money overseas? GE for one is excellent at avoiding most taxes, but there are lots of aspirants. And every few years Congress obligingly hands out an amnesty to bring those tax dollars down at bargain basement rates - but don't try this as an individual. Corporations may be people too, but they're the people who drive Lamborghinis, not Ford Escorts.

    And Apple keeps an office in Reno, not just to watch him die, but to avoid taxes in California by funneling as much business throw low-cost Nevada, even though I've never seen an Apple press release come out "Cupertino, Nevada".

    Our good outraged Congresspeople note Saverin got good value out of his citizenship. Though he could have gone to Stanford as a foreigner, and he was already wealthy, so his investment in Facebook would have been just that - an overseas investment. (Saverin didn't really build the business - that was Zuck & the others - he just provided equipment)

    Saverin wasn't even a citizen for his first 6-7 years in the US.

    But there's a conceit we have - that everyone in the world is just dying to get to America, and couldn't possibly want to live somewhere else except to dodge their fair share.

    Except I've known several people who tore up their green cards just because home was less boring than the US. 

    In any case, if Saverin had just incorporated himself and moved offshore as a tax dodge, no one would have noticed.

    And with the rise of pain-in-the-ass reporting procedures like FBAR and FATCA, that will be a good move indeed. Because those laws would make it difficult for Saverin to invest in anything but a US bank while living in Singapore. Why? we've made reporting so draconian, other countries don't want to deal with us. Way to go guys. 

    Have more than $10k *COMBINED* in banks - which is kinda what you need to live anywhere abroad - you have to report. And your banks have to report. And if you invest, the investee has to report. It all gets grand.

    But we talk about trimming back reporting requirements on business - it lowers productivity, you know.

    Fuck it. We should all just incorporate ourselves and be done with it. Otherwise we won't have any rights.

     

    Comments

    I'm with you that letting US corporations park money, tax free, offshore is ridiculous.  particularly as they still claim this money as an asset and as profit. The simple solution, I say, is that if you want to sell to Americans, and most companies do, then you have to pay US taxes on all of your profits.  Otherwise, good luck doing business without access to the world's largest consumer market.

    As for Saverin... if he'd not been born into wealth, he likely wouldn't have had the privilege of his Miami upbringing.  Folks of average means who might want to stay here for an extended time have to enter a lottery that won't pay off for most.  And forget getting citizenship for your kids if they weren't born here.  Heck, I know an 18 year old girl who was raised here since she was 2.  She's culturally American.  She wouldn't know what to do if she suddenly turned up in her "home" country.  Our system offers her none of the considerations it offers to families like the Saverins.


    by Michael Maiello on Sat, 05/19/2012 - 1:06pm

    But how did Saverin get citizenship? He didn't have it when he got to the US, we don't have a specific system of buying it, so there's the lottery and the regular queue - what else? Took him 6 years.

    Of course if you have money, you can stay anywhere in a hotel. Every system offers that, whether communist China or existentialist Paris. It's not really something we dreamed up in the US or even went out of our way to do.


    by PeraclesPlease on Sat, 05/19/2012 - 2:21pm

    US citizenship is very much for sale.  How do you think that Rupert Murdoch got to be a citizen when so many others didn't?  He didn't win a lottery.  We expedite citizenship requests of people with the means to invest in the country.  It's been like that for a long time.  Saverin waiting 6 years doesn't seem like much compared to what most would-be immigrants go through.

    And, no, it's not the case that any rich person can just "stay in a hotel anywhere." Lengths of visits to the country are limited.  If you need a visa to enter, that visa has an expiration date.


    by Michael Maiello on Sat, 05/19/2012 - 4:07pm

    You can apply for permanent residency, and if you have a business and pay taxes, you can usually get it. Pretty standard everywhere. That doesn't get you path to citizenship, but you can hang out for decades.


    by PeraclesPlease on Sat, 05/19/2012 - 4:22pm

    Maybe there's an unwritten context that I'm missing, or maybe it was meant as satire, but when you write this:

    The simple solution, I say, is that if you want to sell to Americans, and most companies do, then you have to pay US taxes on all of your profits.

    I think, but what if they want to sell to (US) Americans, Brazilians, Russians, Chinese, Indians, Germans, Italians, etc? Should they have to pay all of those taxes on all of their profits? (I think I know you well enough to know that you're not an American Exceptionalist, although I was recently surprised by someone else here…)


    by Verified Atheist on Mon, 05/21/2012 - 9:04am

    PP, if your point is hypocrisy and why are we picking on this one guy and letting all the other egregious malefactors go...I can agree with you.

    Saverin, like most individuals, is an easy target for pols.

    That said, I have no problem with their making an example of him and maybe even squeezing a few buck out of him.

    What he's doing is transparently disgusting--not more disgusting than say Romney--but disgusting nonetheless, perhaps because it gives a little extra hip-cred to tax evasion.


    by Peter Schwartz on Sat, 05/19/2012 - 2:35pm

    You do realize that Saverin will pay US taxes on Facebook capital gains?

    What exactly is "transparently disgusting"?

    And even if he didn't have to pay taxes after renouncing, what exactly's the problem with that? People switch countries all the time - Saverin's on his 3rd - and it doesn't seem like he moved to Singapore just for the taxes. He's lived there for 3 years, and for someone from Brazil, it's quite possible that life in the tropics suits him better. He made his decision before Facebook decided on its IPO.

    http://abcnews.go.com/blogs/business/2012/05/facebook-ipo-eduardo-saveri...

    Update: looks like Zuck & Facebook will get a much better deal than Saverin - using options deductions and loans instead of payouts. Facebook will get a refund because they're so needy, right?

    http://digbysblog.blogspot.com/2012/05/this-just-isnt-right.html

    But once again, we're watching the wrong guy, Saverin. The corporate tax system is rigged with tax avoidance schemes, but we want to go after an individual and tell him he can't live where he wants. Putting the jerk in "knee-jerk", methinks.


    by PeraclesPlease on Sat, 05/19/2012 - 4:33pm

    How do these conversations get so convoluted?

    First, I agree with your general point about the corporate tax system.

    Second, it's pretty clear he gave up citizenship IN ORDER not to pay taxes.

    That strikes me as wrong--as wrong in principle as the tax avoidance schemes if less damaging because less frequent.

    Third, he CAN live wherever he wants regardless of citizenship. You made that point yourself.


    by Peter Schwartz on Sat, 05/19/2012 - 4:46pm

    It's not "clear".

    He lives in Singapore, and has for 3 years. That part isn't about taxes- it's where he likes to be. Whether he expects to live there forever, I've no clue.

    His family was rich when they came to the US, and he made a quick $300K in Brazil while attending Harvard - it's not like he owes everything to the wonderful US system.

    He will continue to pay US taxes on US investments. 

    He came to the US from Brazil at 11, got US citizenship at 18, and moved to Singapore at 27. Now he's 30.

    If he doesn't plan on living in the US, I don't see why at 30 he should stay part of our tax system, aside from normal rules for foreign investors.

    It's likely tax implications drove him to make this decision - me, I've been wondering why I keep my citizenship for years, but there's no huge financial or other reason to change, so I've kept it with no obvious benefit.

    Frankly, from all the partisan political uproar over this, I figure he's making a good move - get to a place that's not infected with politico-media hysteria.

     


    by PeraclesPlease on Sun, 05/20/2012 - 1:40am

    What's missing from this is...did he, in fact, owe these taxes?

    Paying the tax he actually owes and THEN renouncing citizenship should give him everything he SAYS he wants.

    He SAYS he's not doing this to avoid taxes. Well then great--pay the taxes and then do what you want.

    Instead of going on about Saverin, you'd have a much more interesting case if you went after the rest of the system you say you decry.

    If your real point is liberal hypocrisy and Chuck Shumer's in particular, okay.


    by Peter Schwartz on Sun, 05/20/2012 - 11:23am

    He's caught up on taxes - nobody has contended that he owes any taxes right now. And he apparently already paid his exit taxes.

    People are complaining that he stands to make money in the future.

    Of course if he makes money from US sources, he will still pay taxes on those.

    But Congressmen want penalties, 30% capital gains instead of 15%, and other shock treatment, like never ever ever set foot in the US no more.

    Like a spurned girlfriend or something.


    by PeraclesPlease on Sun, 05/20/2012 - 12:34pm

    Okay, if he's caught up on his taxes...

    If he's not taking sort of the "last exit" just before tax time...

    But this is all about money he might make at some time in the future, I have no problem with what he's doing.

    I haven't been following every little twist and turn and got the impression he was bailing just before a big tax bill was going to come due.

     


    by Peter Schwartz on Sun, 05/20/2012 - 5:38pm

    Wait... he paid his exit taxes when?  He renounced his citizenship last year, well before Facebook's offering and $100 billion valuation.


    by Michael Maiello on Sun, 05/20/2012 - 5:54pm

    He renounced his citizenship before Facebook planned its offering.

    He hasn't been involved in Facebook for years - he was kicked out and made a settlement.

    He moved to Singapore over 3 years ago.

    He'll still pay US taxes on US holdings.

    This is a bunch of progressives and conservatives alike getting their panties in a wad about something completely useless.

    How about use that outrage to push for a real tax code and a real progressive spending agenda. Oh my, someone who's wealthy is having fun somewhere - must find, must tax...

    And the horrors - he doesn't love America! He gave up citizenship! And he might save money! He must think we're not exceptional! I go cry now....

     


    by PeraclesPlease on Mon, 05/21/2012 - 12:30am

    Greenwald reminds of this hysterical patriotic/chauvinistic attitude towards immigrants and foreigners, in this case Martina Navratilova on CNN:

    The very personal admission to a paper that she wants to adopt a child and some very damaging quotes in German newspaper allegedly made by the tennis phenom. . . . All of this has pitted Navratilova against the country that has given her so much.

    ...

    CHUNG: Can I be honest with you? I can tell you that when I read this, I have to tell you that I thought it was un-American, unpatriotic. I wanted to say, go back to Czechoslovakia. You know, if you don’t like it here, this a country that gave you so much, gave you the freedom to do what you want.
    NAVRATILOVA: ...... But when you say go back to Czech Republic, why are you sending me back there? I live here. I love this country. I’ve lived here 27 years. I’ve paid taxes here for 27 years. Do I not have a right to speak out? Why is that unpatriotic?
    CHUNG: Well, you know the old line, love it or leave it.

    Presumably Chung means "love it or leave it... but keep paying taxes".

    ​And ignored is how much Navratilova gave to the US - she became a symbol of American largesse, taking in political refugees at the height of the Cold War, and certainly made it much easier for Americans to make money in Prague after the wall came down - who knew where the Czech Republic was without her and Ivan Lendl?

    ​Why shouldn't Lendl & Navratilova continue to pay taxes to the Czechoslovakia (now Czech Republic), which gave them the backing and resources to develop their world class skills, only to see them abandon the country? Why not a "once Czech, forever Czech... for taxation purposes" law?

    ​As usual, American exceptionalism - even for "liberals".


    by PeraclesPlease on Sun, 05/20/2012 - 2:06am

    Soak the rich prick.  What's the problem?


    by Dan Kervick on Sat, 05/19/2012 - 4:37pm

    Republicans are starting to come out in force to support Saverin. And they should.

    What could be more fundamentally American, than giving up American citizenship to avoid paying taxes?


    by NCD on Mon, 05/21/2012 - 10:19am

    Fits into line with the GOP talk about secession.  

    The GOP has become unpatriotic.

    Corporations are people too, my friend.


    by rmrd0000 on Mon, 05/21/2012 - 2:25pm

    For the umpteenth time, Saverin paid his taxes. And will pay US capital gains on US investments.

    He just wants to live in Singapore. I've lived in 7 or more states, a handful of countries. Should I have paid the highest tax rate to a previous state or country when I moved somewhere new? Should we shackle people?

    Would it be okay if Saverin renounced citizenship to go live in France, where taxes are higher? Or would that make him suspicious and socialist?

    It's loony season - if only we had a real presidential race this year, we wouldn't have to make so much crap up.

     


    by PeraclesPlease on Mon, 05/21/2012 - 3:24pm

    Ron Paul would make it a serious race, if the GOP had the guts to nominate a real conservative, instead of that etch-a-sketch former NE liberal guv. With Rand as a VP it would doubling down on real change, Paul, Paul, & maybe Pauls for the next 16 years.


    by NCD on Mon, 05/21/2012 - 4:49pm

    He just wants to live in Singapore.

    Every time you say this, I get sort of confused all over again.

    Can't American citizens live in Singapore?

    Or is he now becoming a Singaporean?

    Or is it easier to live in Singapore IF he's some other nationality, like Brazilian?

    (What nationality will he become, BTW?)

    Anyway, if he's not skipping out on taxes, then I have no problem with what he's doing.

    But I do wonder why Republicans are standing up for Saverin if he ISN'T skipping out on taxes. Like Grover, for example. THEY seem to think this is an anti-tax stand on Saverin's part.

    Unless it's just a way to stick to Schumer on general principles. I don't THINK their base is crazy about foreign tax dodgers, do you?


    by Peter Schwartz on Mon, 05/21/2012 - 5:10pm

    If he doesn't live in the US anymore, what does he owe to the US?

    What services does the US government provide him?

    Do you believe in the great city-state that follows us around?

    Yes, he may save something on taxes on an upcoming IPO, but he moved to Singapore to move to Singapore. Over 3 years ago. Most countries have max 5 years to become new citizens. So completing his paperwork to save *PART* of the IPO proceeds from a country he no longer lives in makes financial sense.

    And I noted that the Dept of Treasury's FBAR and FATCA reporting regulations make *most* American expats want to give up citizenship - the government can abscond with half of a bank account for a minor mistake in reporting, and they're assholes about it. Even IRS instructions to the contrary can't be used because they're 2 different branches of government, and they've successful screwed citizens because of it.

    And just because Republicans eat breakfast doesn't mean I can't eat breakfast.


    by PP (not verified) on Mon, 05/21/2012 - 9:58pm

    So just to be clear, you're saying this is flat out wrong factually:

    "Facebook co-founder Eduardo Saverin’s decision to renounce his U.S. citizenship just in time to avoid a large tax payment essentially means he will not be able to re-enter the United States again, immigration experts tell TPM."

    You're saying there is no "large tax payment" looming...that he's paid all taxes he could be said to owe now or in the near future...and that the only thing in question is taxes he might owe way in the future if he remained a US citizen.

    Do I have that right?


    by Peter Schwartz on Mon, 05/21/2012 - 5:23pm

    From what I saw, he made his decision last September before Facebook (which he isn't part of for a long long time) decided to IPO, but actually filed in January, and it became public in April.

    Estimates are he would have paid $150 million to exit the US with $2.1 billion in current assets. If he had stayed a citizen, he wouldn't have paid that, but he would have paid more on IPO. Do I think he really cared whether it was $300 million? And don't you imagine if he gave a shit, he'd find another way to set up a tax-free trust or other mechanism?

    I don't think he's a hero or cheat - he's just someone who moved, and did what people do when they move, clean up loose ends.

    Fox does nicely catalog all the ways Senators Dem & Rep move their assets around to avoid rightful state taxes - forgetting about Apple having a dummy office in Reno to run its earnings through instead of California with higher rates. 

    http://www.foxbusiness.com/technology/2012/05/17/elected-officials-can-join-facebooks-saverin-in-avoiding-taxes/

     


    by PP (not verified) on Mon, 05/21/2012 - 10:10pm

    Estimates are he would have paid $150 million to exit the US with $2.1 billion in current assets. If he had stayed a citizen, he wouldn't have paid that, but he would have paid more on IPO. Do I think he really cared whether it was $300 million? And don't you imagine if he gave a shit, he'd find another way to set up a tax-free trust or other mechanism?

    I can't answer your question. But it seems like an odd one since, by your estimates, he reduced his tax bill by 50% by renouncing his citizenship in a country where he didn't want to live anyway. That strikes me as easier than setting up a trust.

    Plus, it's unclear what the comparative tax advantages would have been in setting up a trust in this case vs paying exit taxes.

    But it does seem you've been a bit unclear as whether he was about to owe taxes (on the IPO) or not. For a while, you seemed to be saying there were no taxes owed nor to be owed in the proximate future. It seems he was just about to owe taxes and more taxes than he ended up paying (by some amount--you say double the amount, which isn't nothing).

    As to whether he knew an IPO was imminent and was planning ahead--who knows? He may not have. Then again, people who operate at that level tend to know a lot of things that regular people don't have access to.

    PP, I think you've made some good points about the need for broad reform of the corporate tax code. Your defense of Saverin--were they the coffee purveyors?--is a bit weak, though I agree, he's not the big fish.

    Your quip about eating breakfast like a Republican is a nice rhetorical parry, but it actually means, in this case, that you're happy to eat breakfast like Grover Norquist. You can't really be happy to eat like Grover and STILL complain about all the inequities in who pays taxes and who doesn't. Or maybe you aren't unhappy...


    by Peter Schwartz on Tue, 05/22/2012 - 8:16am

    "... that you're happy to eat breakfast like Grover Norquist."  I don't eat breakfast like Grover - I use chopsticks, eat grubs and seaweed, wash it down with maotai, and eat half a ginger root. Now I suppose I should be upset that he even eats breakfast, making us somewhat similar. (Fortunately I have a large growth on my upper lip and some scowling scar on my forehead to tell us apart - does he have a gimp leg too and a facial tic? Have to look it up.)

    ​Re: Saverin, just Google it, the info's there, all the hysteria's contrived by people who don't read enough or still layer on fantasy over basics.


    by PeraclesPlease on Tue, 05/22/2012 - 11:13am

    And are we going to send Saverin an apology now that Facebook's IPO wasn't as high as predicted? Maybe the US government should cover the difference, since we were sure he was hiding future money from us. Fair is fair, no?


    by PeraclesPlease on Tue, 05/22/2012 - 12:00pm

    First off, I love Johnny Cash. Heh, heh!  Second, I know that a lot of you are thinking of renounciating your citizenship because you are mad about Obama but don't do it! If you renounciate it, then you lose the right to vote. This urging people to do it is an Obama plot to try to win the election again. God bless the USA and its patriots--whether they are still citizens or have had to leave because of Obama's taxes.

    W

     


    by The Decider on Tue, 05/22/2012 - 10:04am

    Plus you can't marry Cambodian brides in cash-for-greencard deals, a real goldrush if you do it right. Every time we invade a country, there seems to be more girls girls girls...


    by PeraclesPlease on Tue, 05/22/2012 - 11:16am