Filed under: Capitalism, Economy, Progressivism, Taxes | Tags: Eduardo Saverin, Facebook IPO, Senator Charles Schumer
One of the founders of Facebook, Eduardo Saverin, relinquished his U.S. citizenship in September 2011 , before the company announced its planned initial public offering of stock, which appears this week. He owns an estimated 4 percent of Facebook and stands to make an estimated $4 billion when the company goes public. The move is assumed be a financial one, for as a permanent resident of Singapore he would face no capital gains taxes.
Senator Charles Schumer (D-NY), lifetime politician, is outraged. The Democrats are in the midst of a War on the Wealthy, and waging war on Saverin will help the cause along if he can rouse up enough public indignation about the young man renouncing his citizenship. It is not like Saverin in escaping all taxes, expats have to pay a 15 percent tax on all unrealized capital gains when they renounce their citizenship — which would be more than he would have to pay if he doesn’t sell his Facebook shares. Only the shares he sold would be taxed. Saverin was born in Brazil, and has lived in Singapore since 2009.
Let’s assume that he decided to renounce his citizenship for financial reasons. Barack Obama with all his talk about “the Buffet Rule” has never grasped that nobody, including Warren Buffett is simply dying to pay more taxes. Obama simply thought he’d rouse up the envious, as a political ploy. Walter Wriston, onetime CEO of Citibank put it very succinctly in The Twilight of Sovereignty:
Capital will go where it is wanted and stay
where it is well treated. It will flee from manipulation
or onerous regulations of it value or use
and no government power can restrain it for long.
With the election of the new socialist president of France Francois Hollande, wealthy Frenchmen are in the process of moving to Britain. Californians are departing the Golden State for states with no income tax like Florida, Texas, Nevada or Washington. Wealthy residents of New Jersey, Governor Christie complains, are moving to other states and he wants to fix New Jersey’s tax system. The wealthy have options. Doctors from New York, Massachusetts and Connecticut are moving to Texas. John Kerry, the wealthiest man in the Senate, was famously mooring his yacht elsewhere to avoid Massachusetts taxes.
Democrats are ever so sure that if they just raise taxes on the wealthy high enough, they will raise revenue enough to take care of the budget deficit and the debt that the Republicans are always complaining about. If you get down into the details of taxation and revenue, you find that raising taxes usually brings in less revenue, and lowering taxes significantly raises revenue. It is counterintuitive, but true. When taxes are low, the well-to-do have more income to invest, and more expectation of profit from their investment — which is exactly what happens. And the government gets more revenue and more economic activity. When there is more investment, more people are put to work, and they pay taxes too. Outraged Democrats, who are sure that taxes on the richest nearing 100% will being in lots more money, have never been able to grasp that simple fact. They sneered, and called it “trickle-down economics” which was a misnomer.
Well, Schumer wants to charge anyone relinquishing their citizenship a whopping fee for the privilege (?). Next thing they’ll be building a wall to keep people in. Well, it’s all a political ploy, and you shouldn’t pay much attention. Saverin must be punished for following the law that the liberals wrote. Schumer also wants to punish him, if he does evade the taxation net, by barring him from ever returning to the U.S. Schumer wants to apply the law retroactively to all expatriates for the last ten years.
Pathetic, Mr. Schumer, really pathetic.