Screen Shot 2012-05-17 at 3.39.19 PM - Here's why you can't really blame Facebook's Eduardo Saverin for bailing on his taxes

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Here’s why you can’t really blame Facebook’s Eduardo Saverin for bailing on his taxes

Facebook’s IPO is tomorrow and one of its early founders, Eduardo Saverin, has renounced his U.S. citizenship before the stock goes public in order to save himself $67 million in taxes. The general consensus is that this makes him a traitor of Benedict Arnold proportions. I think this is oversimplifying, and worse, missing the point.

Eduardo Saverin was born rich and he’s getting richer. The son of wealthy Brazillian parents, he moved to the U.S. in 1992, received U.S. citizenship in 1998, and six years later co-founded a company out of a Harvard dorm room which after a legal battle with Mark Zuckerberg is about to make him a billionaire.

Saverin enjoyed U.S. citizenship for 14 years. While he’s invested in companies in Asia, Europe and America, it’s his involvement in Facbeook that’s making him insanely wealthy. Would it have been the right thing to do—the patriotic thing to do—to pay his fair share of taxes to the country that made him a billionaire? Of course. That’s the subtext behind the “Ex-Patriot Act” Chuck Schumer is presenting today, the title of which is obviously intended to be a jab at being “unpatriotic.”

But let’s face it: what Saverin is doing is exactly what all wealthy patriotic Americans do every year—pay as little in taxes as humanly possible.

The U.S. tax code is set up to allow the wealthy to pay much less in taxes than the average joe. The higher up, the more extreme it becomes. Thus you get multi-hundred-millionaires like Mitt Romney paying a 15% tax rate while the middle class pays in excess of 30%. Barack Obama’s “Buffet rule” was created so that Warren Buffet pays at least the same tax rate as his secretary, who currently pays a higher rate than he does.

You can’t really blame individuals for trying to keep as much of their money as possible—it’s human nature. You can, however, blame a system that stacks the deck and encourages people to manipulate loopholes to avoid paying taxes.

And this isn’t even really limited to the wealthy: For every freelancer who’s ever fudged a few deductions to bring their tax bill lower, it would have been more “patriotic” to play it straight and pay your keep. But that’s not how people work. If you tell someone they can pay you three dollars or seven, they’re going to go with three. And while rich people like Mitt Romney or Eduardo Saverin should know better and can afford to not cut corners, that’s also unfortunately not how people work.

Should Chuck Schumer’s “Ex Patriot Act” get passed to impose taxes on those who renounce citizenship? Absolutely. Obama’s “Buffett Rule” should get passed, too, because if you give people an option to pay less taxes, they will always take it.

Yes, Saverin renouncing his citizenship was a scumbag move. But so is allowing our wealthiest citizens to pay the least in taxes and then gripe constantly about the national debt. Blame Saverin, sure, but even more so blame a system that encouarges this kind of behavior. It’s too tempting to avoid, which is why we have laws in the first place. When it comes to taxes, we just need better ones.

  1. May 17, 2012 at 10:46 pm, Travis Trotter said:

    oh we're losing a kid who was born with a silver spoon up his ass, who never had to work a day in his life, is giving up his citizenship of the country that gave him the opportunity to become richer so he doesn't have to give anything back?

    good riddance, you useless entitled little scumbag;).

    while I don't agree with the conditioned idea of "human nature", I agree with you alex that it is a system error…

    Reply

    • May 18, 2012 at 11:15 pm, Jeremy Arthur Vandelay said:

      you're pathetic. I'm actually more embarrassed of people like you than the southern racist / homophobes.

      Reply

    • May 19, 2012 at 12:30 am, Travis Trotter said:

      sit down before you fall down kid.

      Reply

  2. May 18, 2012 at 11:14 pm, Jeremy Arthur Vandelay said:

    I am so sick of all this crap. THE WEALTHY PAY MORE TAXES THAN THE MIDDLE AND LOWER CLASS IN EVERY MEASURABLE STATISTIC.

    THEY DO NOT PAY A LOWER RATE. THIS IS A LIE. A middle class person pays the same 15% capital gains tax as a wealthy person. Newsflash- WEALTHY PEOPLE DON'T NEED EMPLOYMENT, SO THEY DON'T PAY AN INCOME TAX. Comparing income tax rates to capital gains rates is totally dishonest. Anyone that makes $1,000,000 a year as an employee pays both a higher rate, and a higher total dollar amount.

    I am so sick and tired of people that use outright lies to advance their political agenda. WEALTHY PEOPLE PAY MORE THAN THE MIDDLE CLASS IN BOTH PERCENTAGE AND TOTAL DOLLARS. GET THIS THROUGH YOUR HEAD.

    Reply

    • May 18, 2012 at 11:55 pm, Robby Shirk said:

      Yeah, but they have more so they should pay more! How else can I enjoy all of these wonderful services? Lord knows I don't want to pay into it!

      Reply

    • May 19, 2012 at 12:37 am, Travis Trotter said:

      keep drinkin that establishment kool-aid guy. must be a trust fund baby:)

      Reply

    • May 19, 2012 at 2:16 am, Jeremy Arthur Vandelay said:

      that's a great retort- I love that you don't even attempt to discredit the statistics I cited.

      Reply

    • May 19, 2012 at 4:03 am, Jenith Mateja said:

      What's ur point. They should pay more.

      Reply

    • May 19, 2012 at 5:18 am, Jeremy Arthur Vandelay said:

      No they should not. They already pay plenty. The top income tax rate is 39%, that is absolutely more than fair.

      My main point is that I am sick of reading articles like this that perpetuate this lie that wealthy people pay lower tax rates. It is simply not true.

      Wealthy people pay the same 15% rate on capital gains as anyone else with regard to how their investments grow. The difference is that very wealthy people do not have to work because they are able to live off of the interest of their investments, which means they do not partake in the income tax.

      Liberals try to mislead us into believing the wealthy pay a 15% income tax while the working class pay an average of 30%. I like hearing differences of opinion. What I can't stand is spin and deception with regard to making a point, which is exactly what this article is.

      And if you honestly believe making the wealthy pay more in taxes would benefit the middle class, give me 5 minutes to reason with you and I promise you will change your opinion.

      Reply

    • May 19, 2012 at 5:58 am, Robert Goddard said:

      i havent heard liberals complaining about Obama only paying 14%? i suppose its only rich republicams they dispise….

      Reply

    • May 19, 2012 at 8:24 am, Robby Shirk said:

      I honestly believe that there should be a flat tax. There should not be penalties for being more financially successful.

      Reply

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