Posted on 05/28/2012 12:11:45 PM PDT by SeekAndFind
Eduardo Saverin, the co-founder of the social network and Facebook Inc., stands accused of violating the social contract -- the idea that government is based on an agreement among its citizens to ensure mutual protection of person and property.
His decision to give up his American citizenship before the Facebook initial public offering drew criticism for his perceived breach of financial and patriotic duties, including the duty to pay income taxes.
He is even the target of legislation called the Ex-Patriot Act, proposed by Democratic Senators Charles Schumer and Bob Casey, that would ban wealthy expatriates such as Saverin from ever re-entering the U.S. This is seen as a more stringent version of current law, known as the Reed Amendment, which permits the denial of re-entry to tax-motivated expatriates, but does not require it. The Ex-Patriot Act would also tax an ex- citizen’s capital gains at 30 percent for 10 years.
The proposal and the hubbub around the Saverin case are based on two misconceptions about the tax consequences of surrendering a passport and an individual’s motivations for giving up citizenship.
We do not fault Schumer, Casey and others for misunderstanding the mechanics of U.S. taxes on people who leave. These details are tucked away in a few pages that only a handful of lawyers are aware of in an increasingly complex tax code.
The critical confusion is that Saverin, and others like him, somehow avoid U.S. capital-gains tax by moving to another country -- often a no- or low-tax jurisdiction -- and then selling property after they give up their citizenship. In fact, the act of expatriation itself constitutes a deemed sale: an immediate income tax (known as the exit tax) is imposed on all of the individual’s property.
(Excerpt) Read more at washingtonpost.com ...
Apparently neither. Not every nation has the same laws regarding their stock markets as the USA does.
didn’t obumma give brazil’s oil industry a lot of money recently...
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