The catch here is: good luck getting back in. The US gov't takes notice of this stuff, and it's just good to be aware of the implications for if you ever want to come back to the US. Not saying it's wrong or right (by all means, the less tax the better), but it's important to be aware of the consequences.
Apparently it depends on if you are deemed to have renounced US Citizenship for tax purposes or for some other lawful reason:
"8 USC § 1182:
(E) Former citizens who renounced citizenship to avoid taxation
Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is inadmissible."
Judging from the statement he released, he's certainly aiming for a non-tax reason.
If he did it for tax reasons, it would make a lot more sense for him to do it pre-IPO announcement, or really as early as possible, as the amount of exit tax he's liable for is based on an estimate of the value of his assets. As the article mentions, it's easier to argue that number down when it's a private company.
Trust me, he consulted with many of his lawyers and decided to pursue this strategy. For $1-$2B that he's going to save in taxes, he can hire the world's best lawyers and even petition the government. As a foreign investor in startups, it will be attractive for the U.S. government to let him in order to invest in developing US economy.
I am sure Eduardo will be all set. He will be back in the U.S. and will avoid $1-$2B in taxes.
Hell no. There is a point in time when you cross the line between 'money I can spend in my lifetime' and 'money I can't spend in my lifetime'.
There literally is a point where you can't spend the money fast enough (on objects for personal use) to lose it. You can lose it doing dumb things in financial markets or with a business, but if you have $3 billion dollars it is impossible to spend it fast enough to lose it. You can burn $40 million down to see (see: most musicians and athletes), but not $3 billion.
Even earning 2% interest on 3 Billion (i.e. Treasury bonds or something nearly risk-free), you can make $165,000 A DAY.
So buy 3 cars today, and tomorrow, and the day after that, and the day after that. You just can't do it.
So whats the difference between $2 billion and $3 billion? Not all that much. (And I don't believe he is avoiding a billion dollar tax bill, he still has to pay some level of exit tax).
But the difference between being able to come to the US and not coming to the US is significant. What if he wants to go to a movie premiere in LA, or skiing with friends in Aspen, or going to Warren Buffet's annual investors meeting, or seeing a VC in Silicon Valley? You can shop anywhere, you can vacation anywhere, and you can eat anywhere. But some events only happen in one country or another. Some partnerships only happen in one country or another.
That's obviously assuming the IRS decided he renounced his citizenship for tax reasons and he is banned from the US.
You can always use more money, even if you just plan to donate it all to a particular charity that you like. You can buy politicians, islands, hell you can buy a whole country. After you have your living expenses covered for whatever standard of living you prefer, additional money buys you power.
Isn't tax evasion speculation rather than concrete proof in this case? It seems that it was clearly communicated that the reason for giving up the citizenship was his residency in Singapore for an indefinite time.
If I'm still worth more than a billion, no I would not give up my citizenship. When you're worth more than a billion dollars, as Bill Gates has said, money is of no worry any more. You would have to be an idiot to lose it all.
Comments
The catch here is: good luck getting back in. The US gov't takes notice of this stuff, and it's just good to be aware of the implications for if you ever want to come back to the US. Not saying it's wrong or right (by all means, the less tax the better), but it's important to be aware of the consequences.
Apparently it depends on if you are deemed to have renounced US Citizenship for tax purposes or for some other lawful reason:
"8 USC § 1182: (E) Former citizens who renounced citizenship to avoid taxation
Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is inadmissible."
Judging from the statement he released, he's certainly aiming for a non-tax reason.
If he did it for tax reasons, it would make a lot more sense for him to do it pre-IPO announcement, or really as early as possible, as the amount of exit tax he's liable for is based on an estimate of the value of his assets. As the article mentions, it's easier to argue that number down when it's a private company.
Would this still hold for extradition?
True. In this case, it's pretty clear, IMHO, but IANAL.
Trust me, he consulted with many of his lawyers and decided to pursue this strategy. For $1-$2B that he's going to save in taxes, he can hire the world's best lawyers and even petition the government. As a foreign investor in startups, it will be attractive for the U.S. government to let him in order to invest in developing US economy.
I am sure Eduardo will be all set. He will be back in the U.S. and will avoid $1-$2B in taxes.
Would you give up US citizenship for 1 billion (I'm guessing on how much he is saving) in saved taxes?
Hell no. There is a point in time when you cross the line between 'money I can spend in my lifetime' and 'money I can't spend in my lifetime'.
There literally is a point where you can't spend the money fast enough (on objects for personal use) to lose it. You can lose it doing dumb things in financial markets or with a business, but if you have $3 billion dollars it is impossible to spend it fast enough to lose it. You can burn $40 million down to see (see: most musicians and athletes), but not $3 billion.
Even earning 2% interest on 3 Billion (i.e. Treasury bonds or something nearly risk-free), you can make $165,000 A DAY.
So buy 3 cars today, and tomorrow, and the day after that, and the day after that. You just can't do it.
So whats the difference between $2 billion and $3 billion? Not all that much. (And I don't believe he is avoiding a billion dollar tax bill, he still has to pay some level of exit tax).
But the difference between being able to come to the US and not coming to the US is significant. What if he wants to go to a movie premiere in LA, or skiing with friends in Aspen, or going to Warren Buffet's annual investors meeting, or seeing a VC in Silicon Valley? You can shop anywhere, you can vacation anywhere, and you can eat anywhere. But some events only happen in one country or another. Some partnerships only happen in one country or another.
That's obviously assuming the IRS decided he renounced his citizenship for tax reasons and he is banned from the US.
You can always use more money, even if you just plan to donate it all to a particular charity that you like. You can buy politicians, islands, hell you can buy a whole country. After you have your living expenses covered for whatever standard of living you prefer, additional money buys you power.
This isn't just citizenship. This is giving up the ability to obtain a visa: http://www.uscis.gov/ilink/docView/22CFR/HTML/22CFR/0-0-0-1/...
So, if the US government cares, this person could be denied entrance to the US.
Isn't tax evasion speculation rather than concrete proof in this case? It seems that it was clearly communicated that the reason for giving up the citizenship was his residency in Singapore for an indefinite time.
If I'm still worth more than a billion, no I would not give up my citizenship. When you're worth more than a billion dollars, as Bill Gates has said, money is of no worry any more. You would have to be an idiot to lose it all.
Agreed. The IRS doesn't take stuff like this lying down; see http://www.forbes.com/forbes/2005/0328/092.html