This has been a growing trend for a number of years. Changes in the US tax code, US laws, and the way the US government interacts with foreign banks has made increasingly difficult for US citizens, particularly those with assets, to live outside the US even if they are perfectly happy to pay taxes. Not only are foreign banks no longer willing to deal with Americans living abroad but in some cases complying with the aggressive US laws are in conflict with the laws where the people actually live. Naturally this is very frustrating to people who live overseas or who are married to citizens of other countries.<p>The way the US deals with taxes for Americans living overseas is gross overreach any way you look at it and the increasing difficulty of being compliant with US laws applied to people living outside the country is driving this. No other industrialized country treats citizens living outside its borders in this way and this reflects negatively on the US.
You can't escape US taxation by giving up citizenship.<p>He will have to pay the exit tax instituted in the 2008 Heroes Earning Assistance and Relief Tax Act (HEART) on all unrealized gains he has worldwide because his net worth is likely greater than $2 million. I believe it is set at 30%.<p>As Facebook has announced the strike price, the value of the company and what his tax liability is, already has a very dollar value.<p>There used to be a ten year shadow for giving up US citizenship where you'd still have to pay US gain taxes for 10 years after you gave it up.<p>And the federal government has the incentive and the means to collect on someone who is a billionaire.
Some friends of mine are yelling "see? our tax code is pushing capital overseas!" My argument is, that with $4B at stake, even if we had a "reasonable" income tax, people like this would still seek out tax havens where the burden is even lower still.
Saverin was born in Brazil and has been living in Singapore for a while. There are also probably psychological advantages to being out of Zuckerberg's shadow.<p>While taxes might have played a role, it's not obvious that this was the principal factor.
Someone on HN caught that as well: <a href="http://news.ycombinator.com/item?id=3944467" rel="nofollow">http://news.ycombinator.com/item?id=3944467</a>
It's common for UK citizens to give up citizenship, prior to an exit in their business and move to Monte-Carlo or Gilbraltar for a few years to avoid capital gains tax.<p>If Facebook blows up on the IPO and the stock value increases 50% or 100% he could easily be saving $500m - $1b in taxes. It's a no-brainer...
The lack of social responsibility is what erks me the most about Saverin's decision. Saverin takes full advantage of the investments and sacrifices made by countless Americans and then when the country asks for him to uphold his obligation as a citizen, he leaves to save a few percentage points. This is a tactic for small thinkers.
Presumably, he would be paying long-term capital gains this year, which is only 15%. Sure, it's 15% of a lot a money, but it's still only 15%. I guess a big part of the reason to give up citizenship is not the tax, but also the fact that he has strong roots outside the US to being with.
30 years old. He'll have to do his National Service in the Singaporean army.<p>Edit: Correction. His children would be eligible.<p>Also, Singapore doesn't allow dual-citizenship, so he'll have to give up his Brazilian citizenship (if he had it).
Immigrant who only sought US citizenship for financial gain, renounces US citizenship for financial gain. This is not terribly surprising.<p>There is a subset of Immigrants that move to the US, not because they believe in its ideals, but because it is financially advantageous for them to do so. Sometimes it works for the benefit of the US... as in this case. Other times... not so much.<p>On balance, I believe we generally gain more than we lose. Though I have no data to back up that assertion.
Does patriotism have anything to do with citizenship? or is the question of acquiring citizenship becoming a function of your financial/carrer plan? (I can see that in a lot of comments here. It is an easy logic too.)<p>In other words is "patriotism" or "nation state" a medieval concept that will, over the next century, morph into the "market-value-ism" or "market-states"? (In the hypothetical "market-value-ism": You will be able to enter exit & participate in civic activities an any place based on the education/wealth that you have &/or the corporation you are aligned with.)
I believe he would still keep is green card, I'm not sure though.<p>Also, if you worth more than 250K you can get in the US, and get a permanent resident visa (green card).<p>The only 'benefits' [1] of being an US citizen is, the social security money when you retire, and the right to vote.<p>With that being said, I'm about to start the process to become a citizen. I think everyone should do it if they can, since, you don't know what's gonna happen when we have an immigration hating president.<p>[1] Not sure if social security would have any funds when I, and Eduardo, retire. And, I don't think voting counts in this country.
Brazilian law says that he should have lost his Brazilian citizenship for voluntarily acquiring the US citizenship (which also requires that you renounce all others).<p>But I guess with so much cash it won't be a problem.
US citizenship is a nasty trap from which it is extremely difficult to escape. The US is one of a <i>very</i> small number of countries which will happily tax its citizens on income earned overseas, thus causing them to pay double taxes on everything they earn.<p>This has seriously bad consequences for US competitiveness, in particular:<p>1. It discourages competent foreign citizens from seeking US citizenship (a greencard is <i>so</i> much better!)<p>2. It discourages US workers from spending some of their careers overseas, thus reinforcing US cultural insularity and giving competitive disadvantages. Go to any interntional company's office in Singapore, Shanghai, Kuala Lumpur and note that it's filled with Brits, Australians, New Zealanders with very few Americans; this is why.<p>3. And of course, things like this.
He's going to regret this down the road. Yes taxing on Worldwide income is absurd but not more absurd than giving up your right to live in the US. There will come a day, probably not too far in the future, where being young and rich on a tiny island isn't fun anymore and he's going to want to do something with his life. He's going to be quite sad when doing it in the United States is no longer an option.
The catch here is: good luck getting back in. The US gov't takes notice of this stuff, and it's just good to be aware of the implications for if you ever want to come back to the US. Not saying it's wrong or right (by all means, the less tax the better), but it's important to be aware of the consequences.