Why Facebook co-founder Eduardo Saverin is a schmuck

Why Facebook co-founder Eduardo Saverin is a schmuck

Summary: In order to avoid paying taxes on his multi-billion dollar IPO windfall, Eduardo Saverin, co-founder of Facebook, is renouncing his United States citizenship.

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Writing this article without profanity has been almost physically impossible. But we're a family site, here at ZDNet, so I'll just let you insert whatever invectives come to mind.

In this case, I'm talking about Eduardo Saverin, co-founder of Facebook, who -- in order to avoid paying taxes on his multi-billion dollar IPO windfall -- is renouncing his United States citizenship.

There's a truth about life that's often difficult to accept. Justice doesn't always happen. Some people, usually because of their great wealth, get away with doing reprehensible things. It's not fair, and it's not right, but it's what happens.

Case in point, the incredibly ungrateful S.O.B. by the name of Eduardo Saverin. Saverin is child of a wealthy Brazilian businessman. His father was well-enough off in Brazil that young Saverin, at age 13, was on a list of people targeted by Brazilian kidnap gangs, Pando Daily reports.

Seeking safety, Saverin's father moved the family to the United States. America was willing to take the young boy in, give him a safe home, a home away from kidnap gangs, a home with baseball and apple pie.

Eventually, Saverin wound up at Harvard. His time there wouldn't have been possible without the help of the United States, for Harvard has long been the beneficiary of not only U.S. dollars, but the best minds America has to offer. One such mind was that of Mark Zuckerberg, an American.

To make a long story short, Saverin teamed up with Zuckerberg and the Facebook venture was on its way. Facebook, of course, rolled out to U.S. colleges, nearly all of which were living to one degree or another, off U.S. tax dollars.

Twists and turns later, Saverin used the U.S. court system to sue for, and win, a disputed share of Facebook ownership.

And now, Saverin stands to make billions off an IPO on an American stock market.

If he stayed in America, he'd have to pay taxes on those billions. Sure, that's a lot of money, but it's not like he wouldn't still be left with a few billion after paying his due. So, it's not like he would be destitute and living in the streets. He might only be able to afford a hundred mansions instead of a hundred and fifty.

But no. Saverin's been planning this. He actually renounced his citizenship last fall, so his "exit taxes" would be lower, based on the then value of Facebook's pre-public stock, according to Bloomberg.

So, now to the question of justice. Just what has Saverin done wrong? He hasn't violated any laws (that we know of).

What he's done is played a system and gained tremendously for it. A case could be made that that's fair. One of the first things they teach you in B-school is to pay the least amount of taxes you can within the bounds of the law, and even the IRS accepts this as a reasonable strategy.

But going so far as to renounce the incredible gift of citizenship we gave to this man, and by doing so, saved him from kidnap gangs in his native country -- that's below reprehensible.

Justice would be to take away his stock benefits if he renounces his citizenship. Justice would be to block him from raking in all that cash if he's not willing to pay his fair share.

But justice doesn't work that way.

Instead, Saverin is running away to Singapore, a very small country with a very low crime rate. One of the reasons that Singapore has such a low crime rate is that it has a particularly brutal penal system, which not only incarcerates criminals, it subjects them to caning, a particularly brutal and painful punishment.

By not paying his fair share of taxes in the United States, he's essentially stealing from all of the rest of us taxpayers who supported his education and his business venture. If it weren't legal, it'd be a crime.

I have this simple message for Eduardo Saverin: you better walk the straight and narrow very carefully and follow every single law to the letter. Because if you don't, and there's any justice in this world, you will be subject to Singapore's justice system.

And, because you've renounced your American citizenship, no amount of crying will bring Uncle Sam running to your rescue this time, you money-grubbing schmuck.

Topics: Banking, Government, Government US, Legal, Social Enterprise

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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160 comments
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  • Are corporation any different?

    Honestly, is this really any different than Google running a double Dutch through Ireland to lower it's taxes? Or Microsoft? Or Apple?
    RonCri
    • Oh, the irony, oh, the hypocrisy

      Not only that. But you could also take Facebook itself as an example. Author obviously has no problems with Facebook taking all the advertising dollars from companies and entities located in European, Asian, etc. countries, advertising to European, Asian, etc. customers, on Facebook-servers run in European, Asian, etc. countries. Those dollars should never leave said regions, countries in the first place, because they are paid, consumed and served there - still in fact they all flow to the U.S. where Facebook is obviously paying (some) tax after them, gaining on capital. However, that's obviously not a problem for the author. When money flows the other way round, that is.

      Btw. this could be true for mostly all other online and/or multi-national company residing in the U.S. They all manufacture, bottle, assemble, etc. most of their products locally, still their local subsidiaries seem to make almost no profit or even they even generate losses, only on paper of course (thus avoiding to have to pay practically any taxes on their income) - because the U.S. central entity of the company posts huge profit (and obviously nobody would finance a subsidiary if it would really make only losses). It's because the money is then flowing to the U.S., making people there richer. That's not a problem either.

      The only problem is when someone is using the same technique to actually deprive the mighty U.S. itself. That's a crime against humanity and needs to be punished.

      Righty so. Not.
      ff2
      • Oh, the overreaction

        The author chose to focus on one item. No irony or hypocrisy in that.
        Texrat
      • Do you not have a clue? No US company with overseas operations brings the

        money generated back to the US. They all keep it outside the US because the US has the highest corporate tax rate of any country in the entire world. Americans are screaming right now about how their corporations are evading US taxes by keeping their money outside the country.
        Johnny Vegas
      • @ff2

        Yo ff2, why such hatred for the US of A?

        A main point made by the author was that Saverin didn't mind his US citizenship when it benefited him, say possibly saving him from a kidnapping gang. Wonder why he isn't moving back to his beloved birth place? Because he is a coward. It is his right to do what he did, but that doesn't make it right.
        grud
      • Re: Stop wealth redistribution

        1. Theodore Roosevelt was a liberal Republican, not a Democrat (the only liberal Republican ever elected President of the U.S.). Interestingly enough, his principal opponent in the 1904 presidential election was Alton B. Parker, a conservative Democrat from New York whose views on the proper role of government probably weren't much different than yours. Mr. Parker lost in a landslide.

        2. Except for during the Civil War, the federal government didn't collect an income tax before the 17th Amendment was ratified, but many states did and still do. The feds' principal revenue sources were tarriffs (which I'm under the impression were significantly higher than today) and excise taxes.

        Frankly, I don't think status quo ante would be such a bad deal. A lot of Conservatves seem to believe that if only the federal government were reduced to its 19th century role, the abdicated functions would fall into disuse and the Golden Age of Free Enterprise would return in all of its glory, but I know of no reason why that would be the case. Most of what the feds now do, I think the states could do just as well, though maybe multinational execs wouldn't like the more restrictive definition of "interstate commerce" that prevailed in the 19th century, or a reassertion of state control over the corporations they charter or license. It would certainly force more public attention on state governors and legislatures, which could only be a good thing.

        BTW: I suspect that my family were beneficiaries of some of that wealth redistribution (though hopefully, the public got a return on the investment). Where should I send my reparations checks?
        John L. Ries
      • @John L Ries

        http://www.southernstudies.org/2012/02/facebooks-dubious-social-mission.html

        Talk about "redistribution of wealth" - by our subsidizing this company and its actions. That's not a solid definition of "free market" either, but whatever... people don't like details. Just glossy, nice-sounding words... you'd be amazed at how much more in tax money goes toward the most inane whims... including selling chicken mcnuggets in other countries, but a search engine is your friend... if you choose it to be and can stomach the truth.
        HypnoToad72
    • Are corporations any different?

      Well, yeah. They actually employ Americans and pay taxes here, whereas he's just an individual who took advantage of American opportunity and refuses to pay his fair share. Those companies actually benefit others--and help drive the engine of the technology economy. He's just a selfish @#$@$head who took advantage of America's largess and runs away and that ain't right. Elizabeth Warren spoke very eloquently about this subject, and it involves a contract: you don't just "make it" on your own in the United States. No one does. You make it because of a collective support system--ranging from the education system to the highway infrastructure (and that's what DG proved here). And when you make it big here, you give back. That's the social contract we have here--unlike the apocryphal view that the nutjobs on the far right would have you believe. It's actually what made this country great. We are at our best when we all chip in to help foster the greater weal. What this guy is doing is the opposite of that. Ironically, the US Government and academia developed the Internet together--and this guy took advantage of both entities to succeed wildly.

      Lastly, Section 1, Article 8 of the US Constitution: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States..." That last bit is critical: provide for the common defense and general welfare of the United States. The founding fathers understood the importance of this. Those on the far right (see Tamney in Forbes)--and this idiot--do not.
      groobiecat
      • Hmmm...

        Hate much?
        notinkeys
      • RE: social contract

        You [b]must[/b] be delusional. That [i]social contract[/i] was sent to the shredder over 30 years ago by the 'Wall Street' types that decided to send jobs overseas.

        According to the 'Wall Street' types; "social contract, my @$$!"
        fatman65536
      • Stop wealth redistribution

        If the government observed the Constitution and only took the tax money it collects ???for the common defense and the welfare of the United States???, then our taxes would be minimal. There was no income redistribution at all before Theodore Roosevelt and the Democrats took office.

        All taxes are forcibly collected from the taxpayers, but by far most of them are redistributed wealth, not used for the common welfare of the United States. If the United States government stopped redistributing tax dollars, then the budget would be instantly balanced and we would have a surplus to pay off past debt.
        arminw
      • Jeezuz

        @groobiecat
        [i]Are corporations any different? Well, yeah. They actually employ Americans and pay taxes here, whereas he's just an individual who took advantage of American opportunity and refuses to pay his fair share. [/i]

        Do you got a lot to learn.
        klumper
      • The budget

        Arminw, Have you looked at what percentage of the US budget is for the defense and common welfare? A quick look at this chart shows 89% of the budget is for that. Now just what do you want to cut that will instantly balance the budget? Oh, I know, everything that doesn't directly affect you, right?
        boomchuck1
      • Agreed.

        Worse,

        http://www.southernstudies.org/2012/02/facebooks-dubious-social-mission.html

        Talk about "redistribution of wealth" - by our subsidizing this company and its actions. That's not a solid definition of "free market" either, but whatever... people don't like details. Just glossy, nice-sounding words.
        HypnoToad72
    • Honestly, is this really any different than "insert corporation name here"?

      Yeah, all those corporation are terrible too. The difference is they are run by a group of people that are influenced by investors. This is one man leaving with a lot of cash... who in the writer's point of view should give back a little.
      anderxale
  • American ignorism at its best

    "Harvard has long been the beneficiary of not only U.S. dollars, but the best minds America has to offer."
    Sorry to disappoint you, but it's only the dollar concentration that makes Harvard a name. Most lecturers there aren't born American. Actually, lot of them don't even own a citizenship there. Also Harvard pretty much sucks compared to for ex. most European Universities, and the only value the name has on the old continent is that it lies accross the Great Sea - so if someone had studies there, that's something extraordinary; but not because of the level of education or the knowledge gained, but because not so much people can afford to study at the other end of the world.
    ff2
  • Did you count how many rich and powerful ones become of USA's citizen?

    Many rich people from UK, Australia, Canada, Russia became USA's citizens.

    So this citizenship thing goes both way, it is natural thing to happen in a free, democratic world.
    DDERSSS
    • This is what you get when See-BS buys a computer magazine.

      NT
      jabster17
  • Tell us why

    Clearly you don't like what David has to say, but so what?
    John L. Ries
  • Well, no wonder. You don't have...

    ...the polemical tools to explain why. Either that or are too lazy to do so. Either way, you have no credibility at all. Just a sad bomb-thrower. You want to know why he's right?

    You don't just "make it" on your own in the United States. No one does. You make it because of a collective support system--ranging from the education system to the highway infrastructure (and that's what DG proved here). And when you make it big here, you give back. That's the social contract we have here--unlike the apocryphal view that the nutjobs on the far right would have you believe. It's actually what made this country great. We are at our best when we all chip in to help foster the greater weal. What this guy is doing is the opposite of that. Ironically, the US Government and academia developed the Internet together--and this guy took advantage of both entities to succeed wildly.

    Lastly, Section 1, Article 8 of the US Constitution: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States..." That last bit is critical: provide for the common defense and general welfare of the United States. The founding fathers understood the importance of this. David G sees this. You, obviously, do not.
    groobiecat