Recently, Eduardo Saverin, one of the founders of Facebook, renounced his United States citizenship and touched off a firestorm of controversy. However, Saverin is far from the first to do so as there a number of famous tax exiles.
Lawmakers unfriend Facebook founder
The Facebook IPO has been causing a huge buzz, as the press loves to celebrate the accomplishments of companies that are already accomplished.
However, in the midst of the buildup up to Facebook about to offer shares and make the already-rich major shareholders even richer, one of them, Eduardo Saverin, announced that he is renouncing his citizenship, according to ABC. He is applying for citizenship in Singapore, where he has lived since 2009. Accusations of tax dodging flew, and some U.S. Congressmen introduced a bill that would ban people who renounced their citizenship on tax grounds from entering the country again.
Saverin denies it is a tax dodge. Singapore doesn’t levy a capital gains tax, meaning he won’t pay his new homeland a dime for revenue on the Facebook IPO. In the U.S., he would owe $67 million.
Move is old hat
He is not the first tax exile. A number of people do it; in total, 1,700 people renounced U.S. Citizenship last year. Granted, not all of them did so to avoid paying higher taxes; some might have done so for political reasons. In fact a number of famous people are or have been tax exiles.
Most people who go into tax exile do so to avoid paying steep taxes on high income. England is notorious for creating tax exiles. For instance, according to the Independent, actor Michael Caine moved to the U.S. in the 1970s when the U.K. tax rate hit 82 percent but returned to England when the rate was cut. It seems understandable; rates that high make it so one might need loans to pay their tax bill. The rate is now 50 percent and he is threatening to leave if it is raised to 50 percent.
The same goes, according to the Guardian, for Beatle Ringo Starr, who lives in Monac. The Rolling Stones, according to Xfinity, fled to France to record the album “Exiles on Main Street” to dodge English income taxes.
Harder for Yankees
American law makes it hard to be a tax exile; one has to renounce citizenship to do it, according to the Wall Street Journal, and taxes are still levied against assets and income from sources within the U.S. The British have it a little easier, according to the Guardian, because they don’t have to pay British taxes if they don’t live there, except if their employer is based in the U.K. Also, trying to leave assets or money to loved ones or associates while fleeing taxes in the U.S., according to the Wall Street Journal, is not likely to work either. Assets left to anyone as a gift are taxed at the gift rate of 45 percent.
Wall Street Journal: http://online.wsj.com/article/SB121193252276024279.html