chrishansenhome (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
chrishansenhome) wrote2012-05-21 11:46 am
chrishansenhome) wrote2012-05-21 11:46 am
Entry tags:
Expatriation and Wealth
Please note that since I posted this essay, I've been informed that Saverin is a Brasilian citizen and has not taken Singaporean citizenship, nor does he intend to. There are various places where I have struck out the original text to indicate this but if I've missed any, please construe this note as contradicting them.
There has been a lot of discussion lately about the decision of Eduardo Saverin, one of the founders of Facebook, to renounce his American citizenshipand become a Singaporean citizen (Thanks to ![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
leejean for pointing me to a story in which Saverin's spokesman points out that Saverin is now a Singaporean resident and a Brasilian citizen, as he never gave up Brasilian citizenship when he was naturalised in the United States and retained that citizenship when he renounced his US citizenship.) He has lived in Singapore since 2009. As he is now a billionaire through the public offering of Facebook shares on NASDAQ, he is being denounced by US citizens from all over. Senators are demanding that he be deemed an expatriate for tax avoidance purposes and barred from ever entering the United States again. A columnist in Forbes magazine suggests that Saverin is cutting himself off from his roots and from Silicon Valley, the home of startups and a place where he might be expected to invest some money and therefore need to travel there to watch his investments.
Expatriation is a subject that is close to my heart. I moved to England in 1994, gained perpetual leave to remain in 1998 and British citizenship in 2000, continuing as a US citizen. I intend to remain here for the rest of my life.
The United States has gradually over the past twenty years or so put more and more onerous requirements on US citizens who wish to renounce their citizenship. At one time it was as easy as going to your local US Embassy (you can't do it when you're present in the US) and signing a form and swearing an oath. You got a nice certificate (suitable for framing) and you were no longer a US citizen.
As the United States, along with only two other very modern countries (Eritrea and the Philippines), taxes its citizens on their worldwide income whether they are resident in the United States or not, there is some attraction to the idea that, if you are a dual US/whatever citizen, renouncing your US citizenship (assuming you do not wish to return there to live) will simplify your life by removing the requirement that you file a 1040 plus several other forms each year.
If you are wealthy enough, this move would also save you lots of money before 1996 or so. At that time, Congress added the requirement that high-net-worth individuals must pay an exit tax on their holdings when they renounce their citizenship. They have to file a return assuming that they have sold all their assets, and pay a capital gains tax on them. In addition to this, there is a clause in the law which bars any expatriate who is judged to have given up citizenship for tax reasons from returning to the US, exen just as a tourist.
Now we come to the case of Mr. Saverin. He was born in Brasil, and was brought to the United States as a child, and presumably gained US citizenship when his parents did. He was educated in the United States, went to university, and helped start Facebook with Mark Zuckerberg. This has eventually given him ownership of about 5% of the company (exact figures are not available). At a capitalisation of $104 billion or so, this would give Mr. Saverin a fortune of $5.2 billion, give or take a few hundred million. This is not chicken feed. However, before Facebook's IPO, he was not a billionaire but merely a very high-worth individual, and his stock holdings were valued at a fraction of what they are now.
In 2009 Mr. Saverin moved to Singapore. Now, as it happens, I have been to Singapore many times and have not only a Singaporean husband (HWMBO, He Who Must Be Obeyed) but a multitude of Singaporean friends and blog buddies. So I know something about living and working there.
Mr. Saverin, when he renounced his citizenship, went through all the procedures (he can afford the lawyers) and presumably filed his exit tax return and paid his capital gains tax on his net worth. This is what the law requires.
However, the response of American citizens to news of his new citizenship fills me with dread. As patriotism is the last refuge of a scoundrel (©Samuel Johnson as reported by Boswell) one can only shake one's head at the calls for Saverin to be barred from ever entering the US again (this provision of the law has never been enforced, it seems), one can become alarmed at the name-calling: Saverin is ungrateful, a tax dodger, a criminal even, unpatriotic.
The first thing to say is that Saverin is not a tax dodger. When he renounced his American citizenship it is certain that he went by the book (barring fraud, which as a high-profile individual would have been difficult to do) and declared his assets, paid the required tax on them, and renounced his citizenship according to law. He is not a criminal, nor is he a tax dodger.
What Americans (I'm using "American" in this blog post to refer to US citizens, by the way; it's easier to type. All ye Canadians and Mexicans, please do not take umbrage.) seem to be saying is that it is not only unpatriotic and ungrateful to renounce your citizenship, but that people who do so are dishonest and in some way treating citizenship as something that carries no responsibility and can be shucked off like the husk of a corncob, with no consequences. Such people, they think, should be treated with contempt.
Let's consider what citizenship means and why one might want to have more than one, or renounce one to take up another.
American law states that anyone who is born on American soil is, from that accident of birth, an American citizen (with a few exceptions, such as children born to foreign diplomats). Several foreign terrorists have been revealed to be American citizens through being born in America to parents who were in their country's military but in training in the United States. This legal principle is called ius soli, or "law of the soil".
Other countries (Germany, for one) say that a child must have some ancestral connection to Germany to be considered a German citizen. Thus, a child born to an ethnic German in Russia can claim German citizenship on moving to Berlin, while a child born to Turkish parents in Berlin, up until recently, would either be Turkish or stateless. This is called ius sanguinis, or "law of the blood".
I am an American citizen though being born in the United States. I did not choose that; it just happened.
As people do move around, naturalisation (that is, becoming a citizen of another country than the one you were born in) is required to ensure that a person can stay in his or her new country without burdensome restrictions. At one time in the United States, non-citizens resident in the US were required to register once a year (I don't know whether this is still required but it might be.) Becoming a naturalised American citizen not only removed that requirement but allowed you to vote and have "taxation with representation".
Saverin was naturalised as a child, educated in the United States, paid his taxes, and fulfilled all requirements of citizenship (as far as I am aware; I think that if he had not it would have become evident during this current fracas). Now he has moved to Singapore, ostensibly because he likes living there and it is closer to his business and personal interests. I know what it's like to live in a country where I pay taxes but have no legal right of abode and cannot vote: that was my status in the United Kingdom between 1994 and 2000. It is unsettling. You hear political news all the time but elections happen around you and you have no say in who spends your tax money. If you like where you're living (I love London) and want to live there permanently, naturalisation is the next step, and I duly took that. US law (after Afroyim vs. Rusk admits of dual citizenship. The US Government does not like the concept, warns people against it, and would prefer that people do not enter into it. But they do, and the US does not have the Constitutional right to remove US citizenship involuntarily from people who take out another citizenship.
In other countries, this is not the case. Singapore (along with many countries in Southeast Asia and elsewhere) does not allow dual Singaporean citizenship. Thus, people who wish to become Singaporean citizens must renounce their other citizenship(s) when they take the citizenship oath in Singapore. Since Savarin wanted to live in Singapore and take citizenship there, he could not legally do that unless and until he renounced his US citizenship. Savarin has not taken Singaporean citizenship—see the note in RED at the beginning of this blog post.
The fury of those who wish to punish Mr. Savarin still further (assuming that taking 30% of his total net wealth in an exit tax wasn't enough) can be explained only by misguided patriotism. If that were not the case, then these people would not applaud those who moved to the United States from another country and renounced their original citizenship (at least they are supposed to) in order to become US citizens. Is US patriotism somehow different from patriotism in any other country? American exceptionalists may think so, but I don't believe that anyone else does.
Patriotism is an attitude of mind, not a product of where you were born or where you were naturalised and definitely not something that is irreplaceable, irreversible, or innate in every human being. Being treated cruelly in your country of birth does not inspire a person with tender and warm feelings toward it. Ask a Roma in the Czech Republic or Hungary. While the entire culture and the method of education in most countries is aimed at making children feel that they are part of some greater enterprise than just their own family or clan, this can be undone in an instant for many and varied reasons. And the laws in most places accept that people can share or transfer their allegiance due to life circumstances.
It is irrational and unjust for Americans to welcome immigrants with open arms and offer them a new citizenship in the Land of the Free while simultaneously denouncing Americans who move to other countries and renounce American citizenship as traitors, ingrates, and criminals.
It is the right of the United States to set conditions for expatriation, and it has done so. However, it is not right for Americans to then demonise those who fulfill those conditions. Americans should politely regret that they are losing Mr. Savarinto Singapore, thank him for fulfilling his tax and legal obligations before leaving, and get on with the business of building up their own country into a place where immigrants are valued and welcomed.
Interestingly, the reaction in Singapore to news of Mr. Saverin'snaturalisation becoming a permanent resident there has not been universally welcoming. There has been an influx of citizens of the People's Republic of China into Singapore recently, encouraged by the government as a means of filling jobs that many Singaporeans do not wish to take. Some Singaporeans have denounced the newcomers as ungrateful, rude, and even dangerous (a PRC driver recently crashed his car into a taxicab and killed the cab driver and his female passenger along with himself). In Mr. Savarin's case, his move to the Lion City is resented by many Singaporean men, since they are required by law to serve National Service (NS) for two years around the end of their teens and Mr. Savarin will not be required to serve as he is past the age of service. If he has any sons, and they become Singaporean citizens, they will be required to serve NS when they become eligible.
Mr. Saverin, farewell from an American citizen. You will be missed. But welcome to Singapore, a place where there are difficulties but also opportunities and a place where I hope you will be happy and fulfilled.
There has been a lot of discussion lately about the decision of Eduardo Saverin, one of the founders of Facebook, to renounce his American citizenship
leejean for pointing me to a story in which Saverin's spokesman points out that Saverin is now a Singaporean resident and a Brasilian citizen, as he never gave up Brasilian citizenship when he was naturalised in the United States and retained that citizenship when he renounced his US citizenship.) He has lived in Singapore since 2009. As he is now a billionaire through the public offering of Facebook shares on NASDAQ, he is being denounced by US citizens from all over. Senators are demanding that he be deemed an expatriate for tax avoidance purposes and barred from ever entering the United States again. A columnist in Forbes magazine suggests that Saverin is cutting himself off from his roots and from Silicon Valley, the home of startups and a place where he might be expected to invest some money and therefore need to travel there to watch his investments. Expatriation is a subject that is close to my heart. I moved to England in 1994, gained perpetual leave to remain in 1998 and British citizenship in 2000, continuing as a US citizen. I intend to remain here for the rest of my life.
The United States has gradually over the past twenty years or so put more and more onerous requirements on US citizens who wish to renounce their citizenship. At one time it was as easy as going to your local US Embassy (you can't do it when you're present in the US) and signing a form and swearing an oath. You got a nice certificate (suitable for framing) and you were no longer a US citizen.
As the United States, along with only two other very modern countries (Eritrea and the Philippines), taxes its citizens on their worldwide income whether they are resident in the United States or not, there is some attraction to the idea that, if you are a dual US/whatever citizen, renouncing your US citizenship (assuming you do not wish to return there to live) will simplify your life by removing the requirement that you file a 1040 plus several other forms each year.
Now we come to the case of Mr. Saverin. He was born in Brasil, and was brought to the United States as a child, and presumably gained US citizenship when his parents did. He was educated in the United States, went to university, and helped start Facebook with Mark Zuckerberg. This has eventually given him ownership of about 5% of the company (exact figures are not available). At a capitalisation of $104 billion or so, this would give Mr. Saverin a fortune of $5.2 billion, give or take a few hundred million. This is not chicken feed. However, before Facebook's IPO, he was not a billionaire but merely a very high-worth individual, and his stock holdings were valued at a fraction of what they are now.
In 2009 Mr. Saverin moved to Singapore. Now, as it happens, I have been to Singapore many times and have not only a Singaporean husband (HWMBO, He Who Must Be Obeyed) but a multitude of Singaporean friends and blog buddies. So I know something about living and working there.
Mr. Saverin, when he renounced his citizenship, went through all the procedures (he can afford the lawyers) and presumably filed his exit tax return and paid his capital gains tax on his net worth. This is what the law requires.
However, the response of American citizens to news of his new citizenship fills me with dread. As patriotism is the last refuge of a scoundrel (©Samuel Johnson as reported by Boswell) one can only shake one's head at the calls for Saverin to be barred from ever entering the US again (this provision of the law has never been enforced, it seems), one can become alarmed at the name-calling: Saverin is ungrateful, a tax dodger, a criminal even, unpatriotic.
The first thing to say is that Saverin is not a tax dodger. When he renounced his American citizenship it is certain that he went by the book (barring fraud, which as a high-profile individual would have been difficult to do) and declared his assets, paid the required tax on them, and renounced his citizenship according to law. He is not a criminal, nor is he a tax dodger.
What Americans (I'm using "American" in this blog post to refer to US citizens, by the way; it's easier to type. All ye Canadians and Mexicans, please do not take umbrage.) seem to be saying is that it is not only unpatriotic and ungrateful to renounce your citizenship, but that people who do so are dishonest and in some way treating citizenship as something that carries no responsibility and can be shucked off like the husk of a corncob, with no consequences. Such people, they think, should be treated with contempt.
Let's consider what citizenship means and why one might want to have more than one, or renounce one to take up another.
American law states that anyone who is born on American soil is, from that accident of birth, an American citizen (with a few exceptions, such as children born to foreign diplomats). Several foreign terrorists have been revealed to be American citizens through being born in America to parents who were in their country's military but in training in the United States. This legal principle is called ius soli, or "law of the soil".
Other countries (Germany, for one) say that a child must have some ancestral connection to Germany to be considered a German citizen. Thus, a child born to an ethnic German in Russia can claim German citizenship on moving to Berlin, while a child born to Turkish parents in Berlin, up until recently, would either be Turkish or stateless. This is called ius sanguinis, or "law of the blood".
I am an American citizen though being born in the United States. I did not choose that; it just happened.
As people do move around, naturalisation (that is, becoming a citizen of another country than the one you were born in) is required to ensure that a person can stay in his or her new country without burdensome restrictions. At one time in the United States, non-citizens resident in the US were required to register once a year (I don't know whether this is still required but it might be.) Becoming a naturalised American citizen not only removed that requirement but allowed you to vote and have "taxation with representation".
Saverin was naturalised as a child, educated in the United States, paid his taxes, and fulfilled all requirements of citizenship (as far as I am aware; I think that if he had not it would have become evident during this current fracas). Now he has moved to Singapore, ostensibly because he likes living there and it is closer to his business and personal interests. I know what it's like to live in a country where I pay taxes but have no legal right of abode and cannot vote: that was my status in the United Kingdom between 1994 and 2000. It is unsettling. You hear political news all the time but elections happen around you and you have no say in who spends your tax money. If you like where you're living (I love London) and want to live there permanently, naturalisation is the next step, and I duly took that. US law (after Afroyim vs. Rusk admits of dual citizenship. The US Government does not like the concept, warns people against it, and would prefer that people do not enter into it. But they do, and the US does not have the Constitutional right to remove US citizenship involuntarily from people who take out another citizenship.
The fury of those who wish to punish Mr. Savarin still further (assuming that taking 30% of his total net wealth in an exit tax wasn't enough) can be explained only by misguided patriotism. If that were not the case, then these people would not applaud those who moved to the United States from another country and renounced their original citizenship (at least they are supposed to) in order to become US citizens. Is US patriotism somehow different from patriotism in any other country? American exceptionalists may think so, but I don't believe that anyone else does.
Patriotism is an attitude of mind, not a product of where you were born or where you were naturalised and definitely not something that is irreplaceable, irreversible, or innate in every human being. Being treated cruelly in your country of birth does not inspire a person with tender and warm feelings toward it. Ask a Roma in the Czech Republic or Hungary. While the entire culture and the method of education in most countries is aimed at making children feel that they are part of some greater enterprise than just their own family or clan, this can be undone in an instant for many and varied reasons. And the laws in most places accept that people can share or transfer their allegiance due to life circumstances.
It is irrational and unjust for Americans to welcome immigrants with open arms and offer them a new citizenship in the Land of the Free while simultaneously denouncing Americans who move to other countries and renounce American citizenship as traitors, ingrates, and criminals.
It is the right of the United States to set conditions for expatriation, and it has done so. However, it is not right for Americans to then demonise those who fulfill those conditions. Americans should politely regret that they are losing Mr. Savarin
Interestingly, the reaction in Singapore to news of Mr. Saverin's
Mr. Saverin, farewell from an American citizen. You will be missed. But welcome to Singapore, a place where there are difficulties but also opportunities and a place where I hope you will be happy and fulfilled.
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The law does not take into account eventualities, it only takes into account actualities. If I were to renounce my US citizenship this week, and next week win £5 million in the National Lottery, would I be liable for tax? Obviously not. In Saverin's case it was foreseeable, but the law only takes into account the actual sum of money that he possessed at the moment of renunciation. And that would be true of anyone, whether it be me (who is unemployed and a kept man) or whether it be Saverin. I was under the impression that all people are equal before the law, and that no one, however powerful or powerless, should be able to escape the law's requirements or should be submitted to requirements that someone else of the same standing and citizenship are not subject to.
I wonder whether some of this is just envy that someone else has lots of money and other people don't. I say again: He is not "getting away with" anything. He followed the law to the letter and he should not be held to a higher standing than Joe Blow who hasn't a pot to piss in or a window to throw it out of is.
Would Americans be upset if Carlos Slim, the richest man in the world, emigrated from Mexico to America and took American citizenship? Would Mexicans be justified in saying that he was evading Mexican taxes? The logical extension of that would be to prohibit emigration, naturalisation, and renunciation of citizenship for everyone, worldwide.
American exceptionalism is dead. Let's bury it.
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If you bought the ticket while a US citizen, you should be. Returns on investments made during citizenship -- and that includes vested ISOs and employee NQs even if they are not exercised while a citizen -- should be included.
Yes, probably, but specifically because he's Mexican, for what that's worth. But as for justification: they should be able to keep a hook in earnings made on earnings or assets owned while he was a citizen, because if not, the motive clearly IS evasion.
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But it isn't.
You could agitate to get the law changed so that future earnings will be taxed as if the person is a US citizen. And there will be no shortage of Yahoos in Congress who would be happy to do that.
I believe that Lincoln freed the slaves, however. And, if you'll recall, the War of 1812 was fought partially over the fact that the United Kingdom at that time refused to recognise that anyone who was born British could ever be the citizen of another country. Thus, Britain impressed sailors from US sailing ships into the British Navy as it considered them still British citizens. The US won that war and the principle of renunciation of citizenship was established in international law.
The result of such a law would be an immediate exodus of more well-off people to other venues before the law took effect. And as there are few if any controls over the free movement of assets (except, of course for real estate, which isn't easily moveable) they will take all their money with them. And then laugh. And the US will be the poorer for it.
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http://www.channelnewsasia.com/stories/afp_singapore/view/1201649/1/.html
All along I think he has dual Brazilian-US citizenship
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This is the first time I hear this. Singapore has done so. Malaysia, too.
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I just did a search and discovered at least one person who has lost Singaporean citizenship (http://yoursdp.org/index.php/news/singapore/4997-fong-har-breaks-down-as-she-talks-about-her-citizenship-). There are two UN Conventions that cover statelessness. Singapore and Malaysia have signed neither (http://www.unhcr.org/pages/4a2535c3d.html). This means that, in effect, they are spurning international law, for whatever reason. Other countries do this too (the US has not ratified lots of international legal instruments, such as that which formed the International Criminal Court), but the prevention of statelessness is an important subject.
I may do some more research and blog a bit on this. Thanks for pointing it out.
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