(CNSNews.com) – Senator Chuck Schumer (D-N.Y.) and Sen. Bob Casey Jr. (D-Pa.) unveiled new legislation targeting Facebook co-founder Eduardo Saverin, after the Brazilian-born billionaire renounced his U.S. citizenship ahead of Facebook’s public stock offering this Friday.
“Senator Casey and I have a status update for him [Saverin]: Pay your taxes in full, or don't ever try to visit the U.S. again,” Schumer said at a Capitol Hill press conference on Thursday.
Senator Schumer’s bill -- the Ex-PATRIOT (Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy) Act – would punish expatriates like Saverin who renounce their citizenship, if the government thinks they have done it to avoid taxation.
The bill would amend a little-known section of the tax code that deals with wealthy expatriates, adding a stiff tax penalty if the government thinks they have renounced their citizenship as a method of tax avoidance.
Schumer said that Saverin had “defriended” the United States, adding it was outrageous that the Brazilian-born entrepreneur would renounce his citizenship before the government could collect the estimated $67 million he could pay in taxes when Facebook goes public Friday.
“Mr. Saverin has decided to “defriend” the United States of America just to avoid paying his taxes. We aren’t going to let him get away with it so easily,” Schumer said, referring to the cancellation of a Facebook friendship.
Schumer called Saverin’s decision to renounce his citizenship a “tax avoidance scheme,” calling the move that the Facebook co-founder made in September 2011 “outrageous.”
Schumer and Casey’s bill would levy an additional 30 percent capital gains tax on all future earnings made in the United States on all expatriates with either a net worth of more than $2 million or who had an average tax liability of $148,000 over the previous five years.
The new penalty would apply to anyone who has renounced their citizenship within the past 10 years, but would only tax future capital gains.
The bill would also permanently bar any expatriate who renounced their citizenship for tax purposes within the past 10 years from ever entering the United States again, permanently denying them even a travel or tourist visa.
The bill would allow the Internal Revenue Service to determine whether or not an expatriate had renounced their citizenship for tax purposes, placing the burden of proof on the expatriate themselves to show they were not moving abroad to avoid taxation.“We simply cannot allow the ultra-wealthy to write their own rules,” said Senator Casey in a statement. “Mr. Saverin has benefited greatly from being a citizen of the United States but he has chosen to cast it aside and leave U.S. taxpayers with the bill. Renouncing citizenship to simply avoid paying your fair share is an insult to middle class Americans and we will not accept it.”