If you renounce US citizenship can you ever get it back, or is it "bye bye and don't come back buddy!"?
Eduardo Saverin, a co-founder of Facebook, has abandoned his American citizenship ahead of the social networking company's possibly oversubscribed IPO in May. “Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” his spokesman Tom Goodman told …
If you renounce US citizenship can you ever get it back, or is it "bye bye and don't come back buddy!"?
You can still visit the US or even live there, just depends of the country you have got citizenship from. So if you had some German ancestry, you could drop your US citizenship, get a German passport then visit the US when ever you wanted without a visa.
Smart move by this guy as the US taxes it citizens on their global earnings regardless of where they live. So he would have to pay income tax to Singapore and then another 75% extra to the US.
"Smart move by this guy as the US taxes it citizens on their global earnings regardless of where they live. So he would have to pay income tax to Singapore and then another 75% extra to the US."
Not quite totally true.... The way it works on foreign investments is that you have to pay the US the difference in tax. Which can work both ways:
1. If you pay **less** tax in the foreign country you owe the difference. Assume a capital gains tax of 10%. If the other countries tax is say 8% you owe the US a 2% tax.
2. If you pay **more** tax in the foreign country, in certain circumstances you can take a tax credit. So again likewise 10% US and 12% foreign can sometimes get you a credit but it isnt 2% (bastards).
I dont fully understand it but my accountant does. But it certainly works out that you only ever pay the total of the higher tax rates and then not always that :)
Extreme Tax Avoidance
I get hounded by the tax man for a £5 under payment and these people just go an avoid it, and it is legal.
Maybe some retrospective tax legislation might be in order.
I'll volunteer to escort the avid deserter with a good push onto the gangplanks. Good riddance.
Depends on the tax treaty between the US and other country. In some countries you will get double taxed. The original article said that Singapore has no capital gains, therefore he will pay 0% tax on his IPO earnings, unlike if he was US tax resident/citizen/gc holder where he'd pay (I believe) federal qualified dividend rate of 15%
PS: This is capital gains, not income as the GP stated.
Avoidance is not illegal. If he doesn't live in the US and has renounced his citizenship, which is a pretty big deal, why should he pay US taxes?
> I get hounded by the tax man for a £5 under payment and these
> people just go an avoid it, and it is legal.
"Just" going and avoiding it has involved relocating to Singapore. How far would you be prepared to move in order to avoid that "hounding" that you're suffering? You are free to move too, if you think the benefit is worth it.
Nobody volunteers to pay more tax. If you were in the same situation then why would you not avoid tax?
JUST PAY UP!
Scummy low lives avoid paying their way. So I pick up the tab??
There are Jeremy Kyle "guests" everywhere, no matter which country or class.
Just stop relying on 'me' to pay for public services, you Greedy Bastards!
WOW indeed, the parents did a very good job in dragging up its offspring to have no value in society, family, duty, respect, honour. Honestly, lower than a snakes todger!
Selfish, greedy, manipulative, useless twats.
If you could get away with it, wouldn't you? Or would you willingly give over a ridiculous amount of tax as you feel so strongly about paying your way? If the answer is the 2nd part then I would say that you are full of the smelly stuff.
Capital gains tax is not a ridiculous amount. Considering all he did was lend $1K to his friend, I don't see it as objectionable having to pay ~20% (a guess) on his billions. The rest of us are working and paying 30-40% on our earnings.
@AC and They said WHAT? - If you have shitloads of money, more than you can ever sensibly spend in several lifetimes, why WOULDN'T you pay whatever tax they put on it? (If I recall, Peter Gabriel - living in the UK - once said this about Phil Collins - fucked off to Switzerland) I have never resented paying tax - it is part of being a part of the community I live in. If was lucky enough to have more than enough to live on for the rest of my life I might move somewhere else in the world, but I'd pay my taxes here and wherever I set up home.
I am being completely honest here - no attempt at humour. I have never understood why people think it is such a hardship to pay taxes that keep society running.
Federal income tax is imposed on citizens, residents, and U.S. corporations based on their worldwide income. Foreign persons are not subject to U.S. tax on capital gains and certain other income.
So does that mean he's part of the "evil" one percent or something?
It's astonishing to see such absurd levels of greed. The US already has an insanely low tax rate and yet he is willing to abandon his citizenship in order to save himself a bit of money? It doesn't matter whether he saves himself $10m or a $100m, the reality is that he if he simply paid the tax he ought to he'd still be worth hundreds of millions of dollars and would never have to worry about money again for the rest of his life.
The problem with capitalism is that it's not about what you have; it's about what other people have. It seems astounding that politicians have convinced people that those at the bottom are abusing the system and should have their benefits and safety nets removed, whereas rich people should be taxed less because they're "job creators". Same with Mr Osborne - is it really appropriate to lower the top rate of tax at the same time that pensions are being slashed, hundreds of thousands are losing their jobs and millions are being given pay freezes? No doubt there is need for reform but it sends out the wrong message when the only people being asked to pay for austerity are those that can least afford it.
Well, yes actually, they are job creators, this guy especially. At the end of the day he contributed time and his own money at a very risky and uncertain time for a business which now employs 1000+ people and will continue to employ more into the future.
Where would you rather these jobs be created? Seeing as an internet based business can be created or moved to anywhere in the world, if the rates are not right in the current country the company moves and the key staff move with them. A country has to keep the rates for the rich sensible and at least comparative to other countries otherwise the people who own companies, especially less established ones, will simply leave and take the jobs with them.
Yes, the less well paid will be able to sit there and say the rich are taxed a lot more than them, but will they be happy saying that without a job?
"Well, yes actually, they are job creators, this guy especially. At the end of the day he contributed time and his own money at a very risky and uncertain time for a business which now employs 1000+ people and will continue to employ more into the future."
Facebook was built on the back of starting out in a country with very high internet access. If he'd started the business in Brazil he'd have been made nothing. This strikes me as just ungrateful: he built his business on the basis of being a citizen of the Land of the Free and abandoned it the instant it suggested he pay for the privilege.
From my reading of this article, this guy has been in Singapore since 2009. If you're abroad for something along the lines of more than 340 days in a year you don't pay income tax anyway - the only issue here is capital gains tax which applies if you are abroad or not. So I'm not sure why you're even talking about income tax rates.
Also, given that this guy was from Brazil and has lived in Singapore for the last few years I can understand the decision. $100M to change citizenship from a country you only lived in for let's say 12 years... I'm not sure I'd characterize that as astounding levels of greed. Sounds more like prudent behavior given that he doesn't live here anymore anyway. Keep in mind that his money, technically speaking, has not been made yet - not until that IPO...
>>The problem with capitalism is that it's not about what you have; it's about what other people have.
Actually, that's the problem with socialism.
Your ignorance is astonishing. What has capitalism got to be with taxation? Oh that's right, nothing.
"The problem with capitalism is that it's not about what you have; it's about what other people have", nope thats socialism, socialists are always talking about how they should/will spend other peoples money.
a_been, that's a damned lie and you know it. In this day and age, Socialism is all about spending money that other people haven't even earned yet!
"a very risky and uncertain time for a business". For the business, yes, for him not so much. He was a college student, spending his summer vacation on a startup, something that probably looks pretty good on the CV of a Harvard graduate. And I wonder how much of a dent $1000 made in his net worth at that point.
Having said that, I wish him the best. If the job creation he's investing in involves Singaporean sommeliers, well, that's his choice. America was at no expense for his birth and upbringing, was it?
It is a person associated with facebook's "inception". Now, can you please once again explain what exactly do you find astonishing.
Actually, the problem with Socialism is it has been given a bad rep by those corrupt leaders who tried to impose it on their people.
It's been a victim of a major assault of FUD by those who stand to loose everything (the Rich and Powerful) if it was ever implemented properly, and the every-person as a result of that assault seem to think socialism and communism are the same thing.
Your post describes one of the biggest problems with Globalization, i.e. citizens and companies benefiting from the infrastructure, education, laws and sales made in country 'A' -usually a 1st World country- and paying their taxes to country 'B', usually the lowest bidder. The fact that many of these 'B countries' are -more or less well disguised- dictatorships*, where most of the taxes paid by people like Mr. Saverin are used to line the pockets of the elites, while the common citizens have a low living standard, and little chance to improve it.
The process above described implies that the conditions at 'Country A' will worsen, as their lower tax income prevents them from adequately maintaining their Health, Educative and Judiciary Systems and their infrastructure, while at the same time the middle classes -the biggest consumers- vanish.
Does this state of things sound familiar?
IMHO Mr. Savarin is a parasite, and the guys that wrote and approved the laws he uses to cheat the rest of mankind are also parasites.
(Steam pressure going down - Mission accomplished ;-)
Note*: there are several exceptions to this, like Switzerland, but they have been in this business for centuries.
Say what you want about capitalism and greed (it's really greedy to not have money you earned forcibly removed from you? So stopping a robbing is greedy now?).. but what does it say about society that instead of appreciating it when people give to the needy out of the goodness of their heart (yes, that really still happens!), that when we see successful people we immediately want them to be forcefully robbed to help out those less fortunate?
If that's the case, then why would anybody take chances or even take the effort to build a company? Some people live in poverty just to try and build a business so that in the future they could provide a better life for them and their family. Why go through all that knowing that if you ever make it, somebody else will just come along and make you give it up anyways? How is that right to you? Maybe instead of hating him for his success, you should go do it yourself!
Don't forget that the US is the only major western country that taxes its citizens on worldwide income regardless of whether they are resident in the country or not.
By renouncing citizenship he is still liable for the capital gains tax on any windfall he gets from the IPO, but is not liable for tax on income he gets from investing his cash-pile. In renouncing his citizenship he has renounced his rights to US healthcare and other services. What he has done seems totally reasonable. If he was, say, British, and about to make a huge wadge of money from a British IPO he could achieve the same thing just by moving overseas for a few years, without the renouncing citizenship part.
As a Yank living overseas, I have to correct your '340 days' assertion. I spend zero days per year in the USA but still have to file a 1040 every June and pay tax on my global income regardless of source. There is a generous exclusion of US$90k or so per year, but everything over that is taxable by the USA as well as the country(ies) in which its actually earned. Salary, interest, dividends, and capital gains.
We also have to supply details of all bank accounts and their balances, even if we spend zero days per year in the USA. Land of the Free!
"Well, yes actually, they are job creators, this guy especially..."
BZZZZT. Ooops, you said "job creators". Shill much?
Thanks for playing. Here's a copy of our home game.
Facebook is responsible for the lowering of productivity in the workplace and in the home.
.....through their work, on very ordinary salaries with no possibility creative tax planning, to ensuring that our society functions. Without their contribution we wouldn't have any kind of functioning society at all. They (many millions of them) are every bit as important to us all as people like this chap. The difference is that they are, like me an thee, ordinary folk without the overweening sense of entitlement that so many members of the 1% elite seem to have.
What an unpleasant streak of bile-fueled ignorance. I think you summed up your position perfectly when you said "The problem with capitalism is that it's not about what you have; it's about what other people have".
Stow your faux-socialism until you have your facts straight.
Yeah, but it is responsably for the increase of overall Internet bandwidth, which increases general throughput and must create some value somewhere ...
PS I only reply cowardly to A.C.-s
"Abroad for more than 340 days..." Not true - the US is almost alone in taxing its citizens if they don't live in the country regardless of how long they've been away.
What do non-resident taxpayers get for all this tax? Apart from loads of expense, tax and hassle? they don't get to benefit walking the safe streets of the US... I guess the US will send the black helicopters to go rescue you from terrorists/kidnappers compared to, say, the UK who will do fuck all.
The US (or anywhere else for that matter) isn't such a great place that I'd give them a few extra millions if I didn't have to - like if I didn't live there and had no plan to go back. It's not like he gets to make the tax rules anyway.
>> he has renounced his rights to US healthcare
Really? Rights to healthcare? Are you thinking of a different country? Since healthcare is privatized anyone in the world who can afford it can get it, which most likely includes this guy.
Here in the UK I'd do the same thing. The openly corrupt and self-serving UK government does extremely little to merit a tithe on my success.
I'd chuck UK citizenship away in a heartbeat if I could afford to move elsewhere, though it might be more financially expedient to just buy myself a member of the cabinet and maybe pay them 100th of the tax into a personal bank account to have the bill waived.
"Actually, the problem with Socialism is it has been given a bad rep by those corrupt leaders who tried to impose it on their people."
Really? How else do you get Socialism but by imposing it on the people? What, do you want to be socialist on your own? How would you "redistribute" other people's money if it's only your money that you control?
And also, "corrupt leaders"? What other kind of leaders are there? When are people going to stop believing in cuckoo land and get it that utopian dreams are utopian (and dreams, actually)? At least capitalism (or free market or whatever other variation we seem to be having these days) accepts some (or plenty) people will be greedy and tries to work with it. Of course it's not perfect, but it is realistic at least. Oh, and it doesn't take away freedom in the name of some childish BS fantasy and "greater good" or whatever way you want to call it. If you don't like being an adult, dealing with reality, taking responsibility for your actions and choices and standing on your own two feet - you can always stay home with mummy and daddy - that's perfectly fine - but don't ram your life style choices down the rest of our throats.
It depends on what you consider "fair"
If there was a flat tax and everyone paid eg £1000, then someone who makes a million and someone who makes £10,000 pay the same exact amount of tax. A lot of people consider that unfair, enough people that society taxes as a % of income rather than an absolute amount.
However I wonder if it really is unfair. Lets flip it round. Lets say you go to fill up with petrol and they charge you more because you earn more. People earning £10000/year only have to pay £1/litre for petrol whereas if you are earning over £20000/year you have to pay £2/litre.
I imagine in that situation a lot of people would suddenly find the idea of proportional deductions "unfair". Imagine if the person in front of you in the queue can buy a mars bar for half the price you must pay.
Nevertheless generally society thinks %s are fairer when it comes to tax. If two people are taxed at 30% they both lose 30% of their income. On the otherhand the person who earns a million is more paying a higher absolute amount of tax. eg £300,000 while the lower income person on $30000 is paying just £10,000. Is that fair?
Well society goes further doesn't it. The %s even increase for higher earners, so that guy earning 1 million might have to pay 50% on it, whereas the other guy pays 30%. So even proportionally the guy who earns more is paying more.
Some people think this is all fair, but really if it was a board game and the rules were like this, or TVs cost a lot more for rich people than poor people, people would complain. The reason tax works as it does I think is mainly for practical reasons - higher rates for richer people gathers more tax. The reason that's tolerated is that rich people are a minority. The poorer (relative) masses tolerate it. Some of them even advocate it, as a lot of people have this sense that it's fundamentally unfair that a single parent with kids should earn a lot less than a single business person with no dependencies.
The primary purpose of every government is to privatise profit and socialise debt.
It's certainly debatable to what extent they are net job creators, as it is with a great many businesses.
Without Facebook, a great many people who turned out in this version of reality to be FB users would presumably be using other social networking sites, which would also be employing people.
The original flat fee approach was recently attempted in the UK, as the "Poll Tax". Poll taxes have a very, very bad reputation.
The problem with flat Poll taxes is easy to work out if you consider the issue of "disposable income". For the sake of argument, let's assume there are no other deductions, such as National Insurance:
Taxpayer 1 makes £20K / year. Poll tax is a flat fee of £1000. That leaves Taxpayer 1 with £19K after tax. Subtract the costs of living: a car (say £100 / month, including fuel), a mortgage (say £800 / month), two kids (say £500 for food, clothes, etc.) That leaves Taxpayer 1 with just £180 or so per month as disposable income to spend on anything else, including his savings.
Taxpayer 2 makes £200K / year. Poll tax is a flat fee of £1000. That leaves Taxpayer 2 with £199K after tax. Subtract living expenses: an expensive car (say £250 / month, including fuel; we'll assume he's into Chelsea Tractors); the mortgage will likely be quite high (say £2.5K / month). His kids, Quentin and Quentinella are spoiled rotten, so let's make that £10K / month on their private school fees, food, fancy clothes, etc.. That still leaves Taxpayer 2 with over £3900 per month as disposable income to put into savings and other luxuries.
Taxpayer 3 makes £2 million / year. Poll tax is a flat fee of £1000. That leaves Taxpayer 3 with £1999000 after tax. Subtract living expenses: a very expensive car (say £2500 / month, including fuel; we'll assume it's a mid-range Ferrari as this isn't a billionaire we're talking about here) ; an expensive house in a posh part of London: say £10K / month. His two kids, Kensington and Chelsea, will be asking for the same toys and fancy schooling as Taxpayer 2's, but XBox360s and a flat screen TV will cost the same, as will the private schooling, so that's another £10K or so per month, but let's add a live-in nanny as well: £2166 / month. That still leaves Taxpayer 3 with £141,000 / month. Or, to put it another way: he still has about £1.9 million to play with each year. More than enough for that yacht he's had his eye on.
(You can assume that the income is combined across two parents if you prefer, or you can assume all three examples are "single parent fathers". It's the total income that matters in any case.)
As you can see, the wealthier you are, the less you have to worry about living costs, taxes, etc, and the more money you have to spend. Once you reach billionaire levels of money, your basic living expenses become little more than a rounding error.
A flat fee may be the most logical solution, as you're really just paying for a service provided by the government, but it is perceived as being "unfair" because those at the poorer end of the scale feel like they're paying more as a proportion of their income than the rich. And they'd be right.
The thing is, as a proportion of their income, the rich are paying proportionately bugger all for pretty much everything, so this isn't a particularly compelling argument when viewed objectively. As you've pointed out, nothing else is charged according to your earnings, so why should the services provided by a large organisation (like a national government) do so? The wealthy can afford to pay for their own private healthcare, private pension schemes, private education and so on, so they're hardly a burden on the State; why should they be required to subsidise poorer citizens too?
Nobody wants to be a billionaire because they like staring at the Queen of England's, or Benjamin Franklin's, face. They aspire to wealth because it means they never, ever, have to worry about where the next meal is coming from for either themselves, or their family.
Proportional (i.e. percentage of income) taxation really is fundamentally Socialist. It exists—and is tolerated—because it feels "fair", but it's also a lot more convenient and easier than fixing the many other problems that make it effectively impossible to impose a flat annual fee instead. I can think of a few solutions, but they'd require some serious socio-cultural changes. (E.g. making public transport free at the point of use. And that's just a small part of it.)
"What an unpleasant streak of bile-fueled ignorance. I think you summed up your position perfectly when you said "The problem with capitalism is that it's not about what you have; it's about what other people have".
Stow your faux-socialism until you have your facts straight."
Actually, it makes sense. Pure capitalism is all about leveraging your own wealth so as to get more back from others. Economics is, at its heart, the sciences involved in the distribution of a finite quantity: wealth (since wealth is based on matter, and matter is finite--ask any physicist--therefore wealth is finite, too). Economics NECESSARILY involves the transfer of wealth, and these transfers must necessarily be from one party to another. What differs is the methodology. So for capitalism, socialism, communism, whatever, it's ALL about what you have in relation to what other people have. It's what determines what happens to that stuff.
"I imagine in that situation a lot of people would suddenly find the idea of proportional deductions "unfair". Imagine if the person in front of you in the queue can buy a mars bar for half the price you must pay."
One problem is a certain quantity called the "cost of living". This quantity for a given area is fixed (as sustenance, shelter, and other requirements tend to be absolute rather than proportional to wealth). One main reason taxes are proportional is because tax burden butts up against the cost of living and thus places increased burden on those who make near and especially below the cost of living (the tax burden makes it difficult to afford a meal, IOW) whereas the excessively wealthy can be taxed heavily and still have more than enough to sustain themselves.
Another problem is that, in a way, wealth has gravity. The more you have, the easier it is to amass more of it (though monetary leverage, economies of scale, and so on). It's like a game of Monopoly or a poker table. Someone with the lead can leverage the lead to drive the smaller guy out, and eventually, someone will get all the money and end the game...unless something is there to redistribute the wealth and keep the game going.
Because I have no idea what you are on about?
Facebook increasing bandwidth?
There's value it that?
No we have to constantly battle with employees to get on with what they are doing eventhough we allow access during breaks and lunch. For some that is not enough, checking phones every two minutes, answering messages, having conversations during work hours etc etc.
The problem with Facebook is that it artificially instills in people that their personal lives are sooo important that it takes.preference over everything else. They then suffer withdrawal symptoms if they can't get a fix, when in fact their lives are just mundane.
And in the end, there is just never enough of other people's money to spend for the socialists, whose guiding ethos is, as P.J.O'Rourke succinctly put, "to punish success and reward failure"
Sounds like Denmark, except Denmark don't have the 90K basline, and their tax office has no respect whatsoever for double taxation agreements.
Tax on my foreign investment income last year, incl. companies tax in the registered country and danish income tax = 87%. i.e. My company showed a profit of $1 and I got to keep 13 cents.
IIRC Australia has global taxation.
In fact, most of the western world probably has it.
a_been whinged "nope thats socialism, socialists are always talking about how they should/will spend other peoples money."
I expect you enjoy travelling on the socialist free-at-point -use road system and will whine loudly when it is finally piratized.