Two U.S. Senators are trying to pass legislation that targets a specific individual whose legal behavior they found offensive.
Whether Facebook co-founder Eduardo Saverin withdrew his U.S. citizenship to save on taxes, as many in the media have speculated, or to facilitate his decision to permanently live and work in Singapore, as he claims, is impossible to determine. Either way, Democratic Senators Charles Schumer of New York and Bob Casey of Pennsylvania are showing themselves to be irresponsible legislators by introducing a bill that they explicitly conceived in order to punish him.
Called the Ex-Patriot Act, it would impose a 30 percent capital gains tax on the investments of people who renounce their citizenship for tax purposes and ban Saverin (and others like him) from ever gain setting foot in America.
Tech Crunch has details:
Any ex-pat with either a net worth of over $2 million, or an average income tax liability of at least $148,000 over the last five years, "will be presumed to have renounced their citizenship for tax avoidance purposes." The ex-pat will have to demonstrate to the IRS that this is not the case if it is not. If there is a "legitimate reason" for that person living outside the U.S. no penalties will apply. But if the IRS finds that someone gave up their passport for tax purposes, they will impose a tax on that individual's investment gains "no matter where he or she resides."
The rate of that capital gains tax will be 30 percent -- the same that non-resident aliens currently pay on dividends and interest earnings.The tax detailed this act, if approved, will backdate for 10 years after its approval.
Said Senator Schumer: "Eduardo Saverin wants to de-friend the United States of America. Sen. Casey and I have a status update for him: Pay your taxes in full or don't ever try to visit the U.S. again. This is a small, narrow group. And they deserve to get the treatment we're giving them."