Facebook financier flees US tax
Eduardo Saverin, the billionaire cofounder of Facebook who fled to the United States as a teenager to escape the threat of kidnapping, has renounced American citizenship to avoid millions of dollars in taxes when the company goes public this week.
The Brazilian-born Saverin, 30, who has lived in Singapore since 2009, joins a growing number of people giving up US citizenship before a possible increase in tax rates for top earners – putting fresh pressure on President Barack Obama to extend expiring tax breaks for the wealthy.
Saverin appeared in a document published by the Internal Revenue Service last week listing Americans who had renounced their citizenship. His spokesman said he had made the move last September.
Saverin is one of several students who helped Mark Zuckerberg to start Facebook at Harvard University 10 years ago, putting up the cash to launch the fledgling social network.
He acted as its first chief financial officer but was squeezed out of the company after an escalating fallout with Zuckerberg.
His original wealth came from his father, an industrialist who fled to Miami with his family in 1993 after discovering that his son’s name had appeared on a list of targets for gangs specialising in kidnap for ransom.
Facebook’s offering values the company at US$96 billion (NZ$122B). Saverin’s stake stands at 4 per cent, making it worth nearly US$4B and leaving him liable for as much as US$600 million in capital gains tax were he to remain a US citizen. Saverin’s spokesman played down the timing of the move, suggesting that it had more to do with geography than any efforts to dodge taxes.
Singapore has no capital gains tax, although US citizens are liable for the levy wherever they live.
A record 1780 people gave up their US passports last year compared with 235 in 2008, according to government records. That number may soar again next year when income tax rates for top US earners rise to 39.6 per cent from 35 per cent and rates on capital gains and dividends are also are scheduled to rise.
The battle over taxes has become one of the key themes of the presidential election, with Obama seeking to close loopholes allowing the wealthiest to pay lower rates than ordinary workers, while the Republican Mitt Romney insists the burden should be reduced for all Americans.