Eduardo Saverin, the co-founder of Facebook whose falling out with the company and its CEO Mark Zuckerberg was the subject of the 2010 blockbuster The Social Network, renounced his US citizenship last week, and the right has wasted no time labeling him a hero.
Saverin, who owns a roughly four percent stake of Facebook, announced that he was expatriating last week, just in time to avoid paying a federal capital gains tax on the fortune heading his way when the social site files its IPO.
Forbes Magazine, the conservative-leaning and business friendly magazine, ran an article with the headline “For De-Friending The U.S., Facebook’s Eduardo Saverin Is An American Hero.” John Tamny writes:
Saverin’s departure is also a reminder to politicians that while they can obnoxiously decree what percentage of our income we’ll hand them in taxes, what they vote for won’t necessarily reflect reality. Indeed, as evidenced by Saverin’s renunciation, tax rates and collection of monies on those rates are two different things. Assuming nosebleed rates of taxation were a driver of Saverin’s decision, politicians will hopefully see that if too greedy about collecting the money of others, they’ll eventually collect nothing.
Tamny seems to be convinced that Saverin’s departure will open the floodgates for dozens of U.S. executives, investors and other wealthy businessmen who have made fortunes off of stocks and bonds to dramatically renounce their citizenship, break through the shackles of big government and book a one-way ticket to wherever in an attempt to hold on to every last penny they’ve earned. What Forbes and The Heritage Foundation ignore is that the capital gains tax is at a historically low rate, and even proposals to increase it slightly would still fall well short of approaching the rate during the 1970s.
Saverin’s decision to flee the United States is also remarkably shortsighted. As Farhad Manjoo notes on PandoDaily today, Saverin’s life story in particular is one that is quintessentially American.