1%er Facebook Co-Founder Runs Away to Evade Taxes? Here's What Eduardo Saverin Owes America
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When it was revealed last week that Facebook co-founder Eduardo Saverin renounced his US citizenship, even notorious bad-boy billionaire Mark Cuban took to Twitter to express his disgust. The move allows the 30-year old Saverin to avoid paying a significant chunk of the taxes he will owe on the windfall coming his way with the impending Facebook IPO. In making this decision, the Brazilian native did more than expose his blind disregard for all that his adopted country has done for him. He has made himself the poster child for the callous class of 1 percenters who are all too happy to use national resources to enrich themselves, and then skate, or cry foul, when asked to pay their fair share. The story evokes the image of the marauding aliens from the movie Independence Day, who come to Earth to take what they can get before moving on to another planet.
Saverin, who stands to make billions from his 4 percent share in Facebook, hastily moved here at the age of 13 when his name turned up on a list of potential kidnap victims targeted by criminal gangs in Brazil. His father was a wealthy businessman, with a high profile in their home country, and so his family relocated to Miami to protect the youngster. Eduardo thrived in his new country, eventually attending Harvard University, where he had a stroke of life-changing luck when he was assigned future Facebook CEO Mark Zuckerberg as a roommate. Their subsequent struggle over the company has been immortalized in the blockbuster Academy Award–winning film, The Social Network, which portrayed Eduardo as an outsider within the close-knit circle of friends, who eventually only won his stake in the company through a lawsuit based on an early investment in the company.
Writer Farhad Manjoo does an excellent job at pandodaily identifying all the ways that young Eduardo’s years in the United States played a role in the financial bonanza he’s about to experience. Starting with the obvious protection from kidnapping that wealthy people generally enjoy here in the United States all the way through the reasonably functional US court system that awarded him the shares that are about to make him a billionarie, this country played a critical role in this young man’s life. In return, Saverin has decided to relocate to Singapore, where he’ll pay no capital gains taxes on any Facebook shares he sells in the future. In fact, he’ll only pay an “exit tax,” which will be determined by his own team’s estimated value of his net worth at the time he renounced his citizenship. This little move could cost the US Treasury as much as $600 million dollars. That’s a novel way to thank your adopted country.
Saverin exemplifies the spoiled 1 percenter who erodes the fabric of the country that afforded such opportunity by not paying back the investment America made in him. His decisions are a slap in the face of every person who recognizes that, to be a place that can facilitate the birth of new innovations like Facebook, the United States needs resources. Doubt that? Remember what government funded the research that created the Internet and the web? Harvard University, where the Facebook plot was hatched, took in almost $700 million in federal grant support for tuition and research last year alone. But Saverin’s decision is even more insulting to the millions of his less wealthy fellow immigrants who work hard to gain the privilege of giving back to the country that affords them opportunity to pursue their dreams in relative safety. Not to mention the DREAMers who offer to fight and possibly die for the country that they yearn to make their own.
Saverin aside, immigrants add an enormous amount to our economy every year. Despite right-wing rhetoric, even undocumented workers pay plenty of taxes too, including not only sales taxes but often payroll taxes.A study from the Institute for Taxation and Economic Policy showed that undocumented immigrants paid over $11.2 billion in taxes in 2010, including income, property and sales taxes. Immigrants are also disproportionately entrepreneurial. A long-term study in 2008 showed that immigrants are almost 30 percent more likely to launch a small business than their non-immigrant counter parts. Their aggregate total contribution to the business income of the US economy is over 10 percent. In some places like Long Island, they account for upwards of 16 percent of small-business profits. Most of these immigrants see paying taxes and generating income as an opportunity to reinvest in the country that extended a hand to them and their families. Not so Saverin.
This week we’re going to be overrun with stories about the Facebook IPO and the instant billionaires that it creates. It is the kind of economic fairy tale we love to pore over, with the enigmatic Zuckerberg ready to pay over $1 billion in taxes while asking the board to slash his salary to $1 annually. In the midst of this, Saverin’s craven selfishness will help us rethink not only enforcement of our tax code, but also how we recognize and define loyalty and patriotism for all of us, immigrant and native-born, who call America home.