Facebook Co-Founder Gives Up U.S. Citizenship • Hacker News Board

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#41

Post by grandalf » Fri, May 11, 2012, 5:44 PM UTC

ajross wrote: post #35

planetguy wrote: post #9

US citizenship is a nasty trap from which it is extremely difficult to escape. The US is one of a very small number of countries which will happily tax its citizens on income earned overseas, thus causing them to pay double taxes on everything they earn. This has seriously bad consequences for US competitiveness, in particular: 1. It discourages competent foreign citizens from seeking US citizenship (a greencard is s…

What does any of this have to do with the linked article? Savarin clearly wasn't trapped, he "escaped". He wasn't paying significant tax on overseas income, his wealth was generated inside the USA. Point #1 seems to be belied by simple observation. My US-based career has been filled with international professionals, virtually all of whom planned on spending their careers here, and almost all of whom have/had or were…

If you read the article he still has to pay the exit tax.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#42

Post by Aloisius » Fri, May 11, 2012, 5:45 PM UTC

You can't escape US taxation by giving up citizenship.

He will have to pay the exit tax instituted in the 2008 Heroes Earning Assistance and Relief Tax Act (HEART) on all unrealized gains he has worldwide because his net worth is likely greater than $2 million. I believe it is set at 30%.

As Facebook has announced the strike price, the value of the company and what his tax liability is, already has a very dollar value.

There used to be a ten year shadow for giving up US citizenship where you'd still have to pay US gain taxes for 10 years after you gave it up.

And the federal government has the incentive and the means to collect on someone who is a billionaire.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#43

Post by wilfra » Fri, May 11, 2012, 5:45 PM UTC

waterlesscloud wrote: post #23

wilfra wrote: post #10

He's going to regret this down the road. Yes taxing on Worldwide income is absurd but not more absurd than giving up your right to live in the US. There will come a day, probably not too far in the future, where being young and rich on a tiny island isn't fun anymore and he's going to want to do something with his life. He's going to be quite sad when doing it in the United States is no longer an option.

Do you truly imagine this means he has to live on a tiny island? With billions of dollars? The man could easily maintain homes in wonderful places around the world and do whatever he wants with his life in any of them. He's not going to regret this for even a minute.

He wont have to live in Singapore forever but that appears to be his plan at the moment. He's been there for quite awhile and seems to be loving it. It is a great place to be young, rich and good-looking. It's going to get old if he tries doing it for the rest of his life though. 10, 15, 20 years down the road is where that regret will kick in.

Sure there are plenty of other great places to live than the United States - but his career trajectory seems to be in tech. Thats where he is continuing to invest and put his time. All roads in that arena lead to California - a place he just voluntarily gave up the right to ever reside, work and do business in.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#44

Post by tallanvor » Fri, May 11, 2012, 5:46 PM UTC

planetguy wrote: post #9

US citizenship is a nasty trap from which it is extremely difficult to escape. The US is one of a very small number of countries which will happily tax its citizens on income earned overseas, thus causing them to pay double taxes on everything they earn. This has seriously bad consequences for US competitiveness, in particular: 1. It discourages competent foreign citizens from seeking US citizenship (a greencard is s…

It does not discourage US workers from spending some of their careers overseas. Most workers, even if working overseas, don't make enough that they have to pay taxes on foreign earned income. --Between the deduction for money earned overseas, deductions for housing, and other standard deductions, if you earn enough that you're going to get taxed by the US, you earn enough that you might as well pay an accountant to help further reduce your tax burden.

I don't buy #1 either, since most people don't get citizenship in a country unless they plan on settling there.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#45

Post by grandalf » Fri, May 11, 2012, 5:46 PM UTC

cynicalkane wrote: post #7

laconian wrote: post #3

Some friends of mine are yelling "see? our tax code is pushing capital overseas!" My argument is, that with $4B at stake, even if we had a "reasonable" income tax, people like this would still seek out tax havens where the burden is even lower still.

To a multibillionaire, the value of retaining American citizenship could easily be hundreds of millions of dollars. Or it might be much lower in that. The degree of which citizens seek tax havens will be proportional to the level of taxation, not a black-and-white yes-or-no thing.

For a rich person the costs of moving (and other transaction costs) are far less... arguably if the transaction costs were lower (walk across the border to a waiting job) lots more people would do it at far lower income/tax levels.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#46

Post by alain94040 » Fri, May 11, 2012, 5:47 PM UTC

Presumably, he would be paying long-term capital gains this year, which is only 15%. Sure, it's 15% of a lot a money, but it's still only 15%. I guess a big part of the reason to give up citizenship is not the tax, but also the fact that he has strong roots outside the US to being with.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#47

Post by steve-howard » Fri, May 11, 2012, 5:48 PM UTC

tallanvor wrote: post #44

planetguy wrote: post #9

US citizenship is a nasty trap from which it is extremely difficult to escape. The US is one of a very small number of countries which will happily tax its citizens on income earned overseas, thus causing them to pay double taxes on everything they earn. This has seriously bad consequences for US competitiveness, in particular: 1. It discourages competent foreign citizens from seeking US citizenship (a greencard is s…

It does not discourage US workers from spending some of their careers overseas. Most workers, even if working overseas, don't make enough that they have to pay taxes on foreign earned income. --Between the deduction for money earned overseas, deductions for housing, and other standard deductions, if you earn enough that you're going to get taxed by the US, you earn enough that you might as well pay an accountant to h…

It looks like you have to make over $150k/year to have to pay worldwide taxes:

http://www.irs.gov/businesses/small/international/article/0,...

It's not cool on principle, I suppose, but most people find it hard to sympathize with the problems you face when you make more than $150k/year.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#48

Post by planetguy » Fri, May 11, 2012, 5:48 PM UTC

tallanvor wrote: post #44

planetguy wrote: post #9

US citizenship is a nasty trap from which it is extremely difficult to escape. The US is one of a very small number of countries which will happily tax its citizens on income earned overseas, thus causing them to pay double taxes on everything they earn. This has seriously bad consequences for US competitiveness, in particular: 1. It discourages competent foreign citizens from seeking US citizenship (a greencard is s…

It does not discourage US workers from spending some of their careers overseas. Most workers, even if working overseas, don't make enough that they have to pay taxes on foreign earned income. --Between the deduction for money earned overseas, deductions for housing, and other standard deductions, if you earn enough that you're going to get taxed by the US, you earn enough that you might as well pay an accountant to h…

The cutoff is, if I recall correctly, $80K. So it doesn't apply to most workers, only the competent ones.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#49

Post by DenisM » Fri, May 11, 2012, 5:49 PM UTC

planetguy wrote: post #9

US citizenship is a nasty trap from which it is extremely difficult to escape. The US is one of a very small number of countries which will happily tax its citizens on income earned overseas, thus causing them to pay double taxes on everything they earn. This has seriously bad consequences for US competitiveness, in particular: 1. It discourages competent foreign citizens from seeking US citizenship (a greencard is s…

You're wrong about double-taxation. Most countries have an agreement with US to avoid double-taxation, so in practice you pay the larger of the two - US tax or the tax in the country of residence.

Another thing to note is that if you give up your citizenship you only pay taxes for all gains up to that point, so you actually have a choice - stick the American passport and pay US taxes, or give it up and don't pay US taxes.

I don't like the system either, but it's not THAT bad. Certainly did not deter me from coming here :) and will not deter me if I want to go somewhere else.

Re: Facebook Co-Founder Gives Up U.S. Citizenship

#50

Post by zem » Fri, May 11, 2012, 5:50 PM UTC

wilfra wrote: post #10

He's going to regret this down the road. Yes taxing on Worldwide income is absurd but not more absurd than giving up your right to live in the US. There will come a day, probably not too far in the future, where being young and rich on a tiny island isn't fun anymore and he's going to want to do something with his life. He's going to be quite sad when doing it in the United States is no longer an option.

this has got to be one of the most insular things I've seen on hn in a while. sure, the us is a wonderful place in which to "do something with your life"; in fact it's where I've currently chosen to do something with mine, so I'm certainly not bashing it. but the world is full of places in which billions of people are doing fascinating things with their lives; to say that someone who made the considered decision to give up citizenship is going to regret it because only by coming back here can he accomplish stuff is deeply myopic.