WASHINGTON -- Democratic Sens. Chuck Schumer (N.Y.) and Bob Casey (Pa.) took aim at Facebook co-founder Eduardo Saverin Thursday when they introduced legislation designed to tax expatriates even after they have left the country.
Saverin, who stands to make $4 billion from Facebook's expected IPO on Friday, announced that he had renounced his US citizenship last week. His move is widely believed to be a financial one.
The two senators, who called his decision "despicable," said Saverin stands to save $67 to $100 million in taxes by renouncing his citizenship.
AP
Sen. Charles Schumer at a news conference today to unveil a comprehensive plan to respond to Facebook co-founder Eduardo Saverin's scheme to renounce his U.S. citizenship in order to dodge taxes on profits he is expected to collect when the social-networking company goes public
"Senator Casey and I have a status update for him: pay your taxes in full," Schumer said at a press conference on Capitol Hill.
Their so-called "Ex-PATRIOT Act" would impose a mandatory 30 percent tax on American investments for those who renounce their citizenship and would also prohibit individuals like Saverin from re-entering the country.
The law -- which only applies to individuals with a net worth of over $2 million or an average income tax liability of at least $148,000 -- would not apply to non-American investments by former citizens.
Under the proposed legislation, the IRS would decide soon after an individual relinquishes his or her citizenship if the renouncement was motivated by tax avoidance. The individual would then have the opportunity to provide reasons for the renouncement, but there would be a "strong presumption" the move was for tax purposes.
The expatriate would also have the opportunity to re-enter the country if he or she paid all back taxes.
Saverin, who was born in Brazil and became a US citizen in 1998, gave up his citizenship in Sept. 2011 and has taken up residence in Singapore, which has no capital gains tax.
"Mr. Saverin has decided to 'defriend' the United States of America just to avoid paying his taxes," Schumer said, showing his familiarity with Facebook's lingo.
A spokesman for Saverin said his citizenship renouncement had "nothing to do with taxes" and called the legislation a "reaction to perception, not reality."
Schumer scoffed at the denial, saying, "The numbers don't lie."
The senators said the law would apply to all of the approximately 3,000 individuals who have renounced their citizenship in the past 10 years.
Schumer also said the law had nothing to do with class warfare.
"This has nothing to do with [campaign against the richest one percent of Americans]," Schumer said. "Facebook, that's the American way. None of [its other top shareholders] are renouncing their citizenship to avoid paying taxes."
Chuck Schumer, Charles Schumer, Eduardo Saverin, Facebook, Facebook, income tax, citizenship, Bob Casey, Saverin
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