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In reply to the discussion: Senators to Unveil the ‘Ex-Patriot Act’ to Respond to Facebook’s Saverin’s Tax ‘Scheme’ [View all]dairydog91
(951 posts)Last edited Thu May 17, 2012, 05:37 PM - Edit history (3)
Upon renouncing, Saverin paid an exit tax. Essentially, he paid capital gains taxes as if he'd sold all of his Facebook shares for profit. Essentially, he was left with entirely-post tax assets. He has paid, in full, what the system demands. He did not skip out and leave the US hanging (In tax terms, he paid taxes on all of his gains at the time of exit); at the time of exit he owed $0 in US taxes. However, capital gains he would have made in the future are a different story.
His reason for doing so is probably that Singapore has a 0% capital gains rate. Say his base in the shares is 4 billion. Let's say they double in value to 8 billion, and he wants to sell everything (Unrealistic, but simple model). In the US, the gain is 4 billion dollars, taxed at 15% capital gains. Eduardo pays $600,000,000 in taxes if he's a US citizen. In Singapore, capital gains is 0. Eduardo pays $0 in capital gains taxes.
Note: I've really simplified calculation of base on his capital assets. Still, it gives you an idea of what kind of money is in play.
He may be something of a weasel, but at some point you should be able to finalize your tax obligations, leave, and become a citizen of another country if you wish to do so.