Report: Renouncing Citizenship Could Save Facebook's Saverin $67 Million
Bloomberg took out its pencil, paper and calculator and came up with this number: $67 million.
That's how much the news service estimates Facebook co-founder Eduardo Saverin could save in federal income taxes after having renounced his United States citizenship in advance of social media company's public debut.
"The company plans to sell shares for as high as $38 apiece this week, compared with $32.10 in private auctions on SharesPost Inc. on Sept. 26. Saverin's stake may be worth as much as $2.89 billion, based on the company's 1.898 billion total shares outstanding. His stake was worth about $2.44 billion in September.
"Bloomberg calculated the $67 million figure by applying the 15 percent U.S. capital gains rate to the approximate $448 million spread between the two values. Bloomberg's methodology was reviewed by Robert Willens, an independent tax adviser based in New York."
Saverin's spokesman told Bloomberg their calculations were flat out wrong and that it furthers the narrative that Saverin gave up his citizenship to dodge taxes.
"His motive had nothing to do with tax and everything to do with his desire to live and work in Singapore," Tom Goodman told Bloomberg.
Since Saverin's decision became public earlier this week, it has been derided and praised by those who accused him of being greedy and trying to dodge taxes and those who say it's just a symptom of a costly tax code.
Today, in an op-ed by The Los Angeles Times,Bruce Ackerman defends the individual right to renounce one's citizenship, but the consequence of doing so should be severe, he argues.
"The key point is to reject the cynical notion that citizenship is just another marketplace commodity," Ackerman writes. "If an American wishes to separate himself from this country and its people, he is taking a step of deep significance. He should not be able to easily return and brag to his friends about the billions he is making by evading civic responsibilities."
In today's Wall Street Journal, the paper finds that while the practice of giving up citizenship is rare, "the trend has accelerated over the past two years—especially in Asian financial centers."
The paper found that in 2010, about 100 Americans "opted out of U.S. citizenship in Singapore last year, almost double the 58 that did so in 2009." About 1,780 gave up citizenship worldwide in 2010, up from 742 in 2009.
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