Sens. Chuck Schumer and Bob Casey held a press conference Thursday morning on Capitol Hill where they outlined legislation that would prevent the Facebook co-founder from ever returning to the United States.
Saverin, who now lives in Singapore, renounced his U.S. citizenship earlier this year. He will become astronomically wealthy on Friday when his former venture is listed on the NASDAQ. By renouncing his citizenship, Saverin is likely to avoid capital gains taxes on his Facebook shares.
Schumer called Saverin’s decision “outrageous” and labeled his tactics a “scheme.”
“Saverin has turned his back on the country that welcomed him and kept him safe, educated him, and helped him become a billionaire,” Schumer said. “This is a great American success story gone horribly wrong.”
Saverin and his representatives insist the Brazilian native did not renounce his citizenship for tax reasons.
In statement to CNN on Thursday, Saverin said it was “unfortunate” that his choice had led to a debate “based not on the facts, but entirely on speculation and misinformation.”
“I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government,” Saverin said. “I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen.”
Still, it seems likely that the move will help Saverin escape some of the hefty taxes he’d have to pay on his Facebook stake, though it’s not known exactly how much of the company Saverin currently owns.
He owned 5% of the company’s outstanding shares as recently as 2009, according to “The Facebook Effect,” by David Kirkpatrick, but he has sold off some of those shares since then. He was not listed among those owning 5% or more of the company in Facebook’s pre-IPO regulatory filings.
The Brazilian-born Facebook co-founder became a U.S. citizen in 1998 and has been living in Singapore since 2009, but the United States requires its citizens to pay income taxes no matter where they live. Saverin, who provided some of Facebook’s initial financing, has not played an active role in the company for many years.
Schumer and Casey are calling their bill the “Ex-PATRIOT Act.”
The proposal says that if a wealthy American seeks to renounce their citizenship, it will be presumed they have done so for tax purposes, unless the individual can convince the IRS otherwise.
If the person is unable to convince the IRS, they will be subject to 30% capital gains tax on future U.S. investments no matter where they live. Furthermore, they will not be allowed back into the United States. “Period,” Schumer said. “They could not set foot in this country again.”