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When Facebook went public last week, its value exploded to more than $100 billion and snagged wunderkind CEO Mark Zuckerberg almost $30 billion. A former Miamian is counting his own freshly minted billions this week — and dominating headlines for a totally different reason.
His name is Eduardo Saverin. Until recently, everyone knew him as the "good guy" played by Andrew Garfield in the Oscar-winning movie about the Facebook founders, The Social Network. Before he met up with Zuckerberg at Harvard, Saverin lived in Miami for seven years and attended posh Pinecrest school Gulliver Prep.
But Saverin's good-guy image officially wore off just before Facebook's sale, when the now-Singapore-based entrepreneur renounced his American citizenship just in time to avoid taxes on his $4 billion Facebook fortune.
It's not a move that should surprise anyone who grew up with Saverin. In 2002, as a 19-year-old college freshman, Saverin gave an interview to a Gulliver student writing for a University of Miami journalism workshop that made his worldview clear.
"I do not feel any form of connection to the United States that goes beyond the mere use of its resources," Saverin said. "I believe that individuals should extract the gains that the land has to offer."
Saverin, a São Paulo, Brazil native, moved to Miami in 1993 after his wealthy family was allegedly threatened with kidnappings. At Gulliver, he quickly proved to be one of the school's smartest students. By his senior year, he was class president, a finalist for a national science prize worth $100,000, and winner of a local plant society competition.
"He was not superoutgoing or extroverted," remembers classmate Kassandra Doyle, now a Miami-based lawyer. "So it's ironic that he was involved in starting such a friend-making thing as Facebook."
She adds, "We were all nerds to begin with, but he came to our school and became king of the smart kids without even too much effort. Then the next thing I hear is that he invented this website to make friends."
Saverin's decision to renounce his citizenship has stirred waves of angry protest. Democratic Senators Chuck Schumer and Bob Casey Jr. introduced the "Ex-Patriot Act" to punish those like Saverin who renounce American citizenship to dodge taxes.
"Eduardo Saverin wants to de-friend the United States of America just to avoid paying taxes. We aren't going to let him get away with it," Schumer said.
Saverin has denied tax dodging. He has lived in Singapore — where there is conveniently no capital gains tax — since 2009 and renounced his American citizenship last year.
The fact that the U.S. government published his renunciation a week before Facebook's initial public offering is just a coincidence, Saverin said.
David Hryck, a tax expert with SNR Denton, says such citizenship swaps have become increasingly common in recent years. The Great Recession lowered the market value of many fortunes, including Saverin's. By renouncing his U.S. citizenship before Facebook went public, Saverin was forced to pay up-front taxes ("hundreds of millions," he claims) but saved as much as $100 million in the long run.
More than 1,700 other ex-Americans have done the same thing so far this year, Hryck points out. "If Saverin is going to live outside the U.S. and stay in line with U.S. residency rules, he's entitled to."
The Ex-Patriot Act, however, would claw back millions from Saverin in the future, even though he is no longer a U.S. citizen and doesn't live here anymore. But after giving Uncle Sam the one-finger salute, Saverin now faces an additional risk. If American officials decide he ditched the country to avoid taxes, he could be barred from ever re-entering the United States.
Doyle, at least, shrugs off Saverin's decision to renounce his American citizenship. "Hey, corporations do it all the time," she says. "It's his prerogative. He wasn't born here. It was just his haven for a while."
Here's a crazy idea... How about the government stops spending so much money so that taxes don't need to be so high. Then people like this might actually want to stay here and spend their money voluntarily, either by consuming things here or by directly hiring people when they invest in other things?
But no... We'd rather give him a public spanking, shame him, and forcefully take his money. Yeah - definitely the kind of precedent we want to set. I'm sure that's a great message to very wealthy people everywhere. Very welcoming.
These United States are a great place. Unfortunately, the people in charge of it are not so great, and they are bringing it down to their level. We can and should do better!