Have you bothered to think that through? You do realize that none of the people that visit the US paid US taxes before right? Would you like to set up a system where only people that pay US taxes are allowed into the US?
Dude has left the country and lives some where else, why would he pay US taxes?
Better yet, answer that one simple question: If he moved from California to Texas, does he still owe California money?
ETA And what is with this obsession with attaching taxes to citizenship? Can anyone name another country that does it?
Somehow, you think there is no difference between a state and a sovereign nation, and I think it is pointless to try to disabuse you of that mistaken notion.
There are two countries in the world that claim they can tax their citizens no matter where they live. One is United States. The other is, I think, Libya. Or was it Philippines?
Would he still obtain the benefits of being a citizen? (Social security, medicare, etc), at least if he came back? If so, then yes, he should pay taxes.
We’re talking about federal taxes, not state taxes, and I think you know that.
For a crude analogy, look at citizenship as a club. You have a membership in a club, and you obtain these benefits by paying dues (taxes). You can leave the club temporarily, or go somewhere else, but as long as you’re still on the membership roster, you’re required to pay dues. After all, you’re still entitled to obtain the benefits of said club.
Well, wait a minute, you say! I don’t want to pay these dues anymore! Well, fine. But then you no longer can be a member of this club. You have to give up your membership. Okay, fine, no problem. HOWEVER, that means you’re no longer allowed to stay in the clubhouse, and enjoy the same benefits that other members pay for. You can’t stay for free, that’s not fair to everyone else.
Why don’t you go and find it, it’s your question. IIRC, American taxes are actually pretty low compared to other countries.
While I understand Saverin’s position, it still saddens me. My parents went through a lot of trouble to become US citizens. And when I say a lot, I mean a LOT. They survived the Holocaust, then they escaped Communism during the Hungarian uprising of 1956. They spent time in a refugee camp in Austria before finally getting permission to immigrate to the US.
I keep hearing North Korea, and that there are only a handful of countries. I’m sure a google search could answer the question, but either way, for those of us who live overseas for legitimate reasons, and not simply as a tax dodge, it’s a pain in the ass to file the documents. Were I making a lot of money and living in a place which had low income taxes, then I would have to actually pay US taxes.
When a Japanese citizen, who has enjoyed the benefits of citizenship, including receiving a public education and protection from fires, crime and foreign invaders, migrates to America, he or she is solely responsible for US taxes.
Of course, this is something which is difficult for people to understand, so I don’t openly bitch about it, much. More of an inconvenience than anything else.
Anyway, back to Eduardo Saverin. I see this as part of the way that the tables are stacked to the rich. I think that since the value of Facebook increased during the time he was in America, and part of the increase was because of the work he did in America, that in fairness, the tax on his capital gains should go to America. But I recognize that the tax code is not about being fair or not.
Like I said, it’s a personal opinion. And I agree that the US law on this subject is wrong.
But giving up your citizenship over a tax issue? That I just don’t understand. To me, it would be the equivalent of divorcing your wife because there was a tax advantage to being single. It might be true, but some issues are bigger than taxes.
However, I understand there are people who have a different priority than I do on the issue of taxes. I remember reading once somebody who wrote that their biggest concern over dying was the high rate on estate taxes. Really? Your biggest concern in regards to your own mortality is your tax situation?
People have done that, though. My grandparents divorced to avoid Medicaid spend-down rules. (They had been separated for many years, though, so their remaining marriage was just a legal arrangement that ended up getting in the way. And I’d imagine that some US citizens living abroad feel the exact same way about their citizenship.)
Using a loophole to evade your taxes is not in any way something to be proud of. It’s the reason our society is so messed up.
I don’t have a problem with rich people. I have a problem with people for whom making money is their sole motivator. I have a problem with there being all this wealth in the world and still people dying because they can’t get something that costs less that $10. ]
Throwing in that the U.S. debt is caused by these people not contributing their fair share, and likely made the recession much worse than it should have been, and I don’t know how I could not have distaste for these people. They cause problems with the rest of the world because they are so dadblasted selfish.
What he is doing is 100% legal and his pre-IPO stock is worth a hell of a lot more than $0, officially.
Neither facebook nor My Saverin gets to make the determiniation of the value of the stock. The IRS does that and he can challenge that determination in court. In this case we have an active market value for the stock so value is really easy to establish and defend.
It doesn’t matter where you keep your money if you are an American.
Thats assuming that the value of his assets increases.
Not really sure taht’s true. IIRC renouncing citizenship made you persona non grata here.
Considering that there is an actual market for facebook shares I doubt the IRS will see things your way.
For what its worth, I don’t think Saverin is trying to avoid facebook capital gains taxes. He just doesn’t spend a lot of time here and doesn’t really see a need to be a US citizen if it means filing a US tax return every year.
Its not like dying, its like selling everything you own the day before expatriation and recognizing all built in gains.
Facebook doesn’t dictate the value that the IRS puts on this stock any more than companies can dictate the value of stock options that are granted to their executives.
If only tax planning were that simple.
Plenty of people in Singapore pay US taxes.
Because our tax laws say so.
Its called withholding taxes on royalties and licensing fees.
The expatriation tax taxes you on gains you accrued while you were a resident not on gains you acrrue after you leave.
There is no “active market value for the stock”. The secondary markets for it are shut down, and the facebook’s restrictive repurchase agreement values it at $0.01.
Well, then the exact value might be harder to pin down but it won’t be zero. The trading restriction is merely one factor among many in determining the value and frankly it is probably a fairly minor factor compared to recent trading values.
Will anyone lend you money based purely on the collateral value of the stock? Then the value is not zero.
The fact that there are temporary trading restrictions on the stock of a 100 billion dollar company does not make the company worth a penny a share.
So a week ago facebook has a market value approaching $100 billion but because facebook is stopping that trading pending an IPO, the stock is now almost worthless because you can’t trade the stock until that IPO occurs? Go on pull the other one, it has bells on it.
The “exit tax” values the stock as if it was sold at the time the tax is assessed (at the time of renunciation of the citizenship), not at some future time. If there is no way to sell the stock at the time the tax is assessed except for $0.01 back to Facebook, then that is the value of the stock, according to IRS rules. You’re right, his stock is not “worthless”. It is worth about $400K. The taxes from that would be around $60K.
They asked the main secondary markets to stop facilitating trading about a month ago in order to ease valuation concerns for the IPO. Those markets likely did that only because they wish to not ruffle the feathers of powerful people. There is nothing to preventing anyone from selling their Facebook stock now, nor is there any reason I cannot buy it from a willing seller. Regardless, the idea that missing a month or two of actual market prices means the IRS will value the stock at $.01 is laughable.
Furthermore, the if you google “Facebook restrictive repurchase agreement”, there is only one result (aside form this thread): this forum which it seems you either quoted, or vice-versa. But let’s just assume such an agreement exists, and it says what you say it does. It does not apply as Facebook is likely not going to be considered a “closely held corporation”, nor are “market quotations are not available”. Your argument makes no sense whatsoever.
*And I don’t know you work at Hantzmon Wiebel, but I would imagine they don’t want people linking to stuff on their website to make what is by all accounts a terrible argument.
That said, I repeat my earlier proposal. If you are so sure that you have it right, put some real-life money on the line. Instead of idiotically repeating what I would argue is a thoroughly debunked claim that flies in the face of the testimony of several experts (and common sense) why don’t you put your money where your mouth is? How much do you want to bet his Facebook stock will not be valued at a penny?
Your fallacy is thinking that when the IRS takes Mr. Saverin to court, the judge won’t see this as an obvious trick to get out of paying his taxes. No reasonable financial expert would say that his shares were worth only $0.01 on that day.
This. The IRS/gubment/pretty much any organization can be counted on to do several things. First, what is generally in their best interest (give us your millions/billions!). Second, interpret laws/rules to their advantage. If the letter of the law is what gives em more money, thats the arguement they will make. If the spirit of the law is what will net them more money, then that is what they will argue.
Sure, this guy may argue that the stocks were technically only worth a penny and he MAY win, but I cannot imagine the IRS going down without a fight.
Terr, since my house is not publicly traded on an exchange, can I sell it to my wife with the stipulation that she must give me a right of first refusal in a sale for a penny? And then reduce my property tax? Will the county assessor value my house at one penny?
Goldman said the decision not to conduct a private placement of the shares of Facebook, a closely held company, in the United States was solely its own and was not required or requested by any other party.
Eight U.S. lawmakers backed a bill that would allow** closely held firms including Facebook Inc. **and Twitter Inc. to have as many as 1,000 shareholders before being required to file public financial statements.
“All property of a coverede expatriate will be treated as if sold on the day before expatriation date for its fair market value” Section 877A(a).
See the words “fair market value” in there?
These sort of provisions aren’t some new novel trick that Facebook came up with to thwart the tax code. It is a fairly common provision that has been around for at least 60 years. The concept of restricted stock is not new and even in cases that purport to make the stock worthless upon transfer before a certain date (vesting period) the IRS has still been able to assess a value above zero.