New legislation announced Thursday aims to crack down on Americans who renounce their citizenship in order to avoid paying taxes. It would force them to pay a 30 percent tax on all future U.S. investments and prohibit them from ever setting foot in the country again.
The “Ex-PATRIOT Act” was unveiled in the Capitol by Sens. Chuck Schumer (D-NY) and Bob Casey (D-PA), who made no secret that bill was inspired by Eduardo Saverin, the Facebook co-founder who is in the news after renouncing his U.S. citizenship just in time to avoid paying taxes on a large windfall, and relocating to Singapore, which does not levy capital gains taxes.
“Eduardo Saverin wants to de-friend the United States of America just to avoid paying taxes and we aren’t going to let him get away with it,” Schumer said. “This is a great American success story gone horribly wrong.”“This guy thinks he can just rip us off by engaging in this scheme,” Casey said. “Mr. Saverin spits in the eye of the American people when he does this.”
Under the bill, Americans who renounce citizenship and have a net worth of at least $2 million or an average 5-year income tax liability of $148,000 or more would be presumed to have done so to duck taxes, and would face a heavy burden to prove otherwise. Those found by the IRS to have renounced citizenship to avoid taxes would be subject to a 30 percent tax on future U.S. investments irrespective of where they live, Schumer said.
Current law already bars Americans who renounce their citizenship for tax purposes from seeking residency within the country again. The Schumer-Casey bill would beef up enforcement of that provision and also close off existing avenues to visit the U.S. under a waiver. “They would be barred from returning to the United States, period,” Schumer said.
Asked whether they have any reason to believe Republicans would support the measure, Schumer and Casey welcomed them to explain why they would not.
The bill, if it becomes law, would not apply retroactively and so it may have a limited application to Saverin. But the two senators said it would send an unambiguous message to those who seek to follow in Saverin’s footsteps.
“Expatriates like Saverin cannot continue to receive the benefits of doing business in the United States without any tax responsibility. Citizenship is not for sale,” Schumer said. “The despicable trend that Saverin exhibits must be stopped dead in its tracks.”