FOX Business’s Peter Barnes is reporting that Democrats want to introduce legislation to “reimpose” taxes on people who renounce US citizenship and bar their reentry to the U.S.
Continue Reading Below
This D.C. harrumphing is over the decision by Eduardo Saverin, a Facebook co-founder, to give up his U.S. citizenship last September to become a citizen of Singapore in advance of Facebook’s lucrative initial public offering (Saverin was born and raised in Brazil, and moved to the U.S. in 1992).
Take note that plenty of our elected officials have gamed the tax system to lower their bills, or defrauded the Treasury Department (see below) when taxes rise.
Take note too that Saverin probably paid more than his “fair” share of taxes, because when you renounce your American citizenship, you have to fork over loads in taxes on all that you own, and then you get to move. Saverin has also created plenty of wealth, jobs and federal, state and local taxes by co-founding Facebook.
Saverin's spokesman said, “Eduardo's decision had nothing to do with taxes” in response to criticism his client moved to avoid paying millions to Uncle Sam when Facebook goes public.
The U.S. has the fourth-highest capital and dividend taxes in the world, which destroy the very same capital investment angel investors have given to launch Facebook, Microsoft, PayPal and Yelp, among other tech hits.
Want proof people change their behavior when taxes rise, even to the point of evading taxation? Just ask our politicians. Former Ohio Democrat senator Howard Metzenbaum, a liberal who fought for higher estate taxes, decided to move to Florida before he died. Florida doesn't have an income or estate tax, while Ohio has some of the highest state income tax rates and estate taxes in the country.
Sen. John Kerry (D-Mass.) relocated his $7 million yacht in neighboring Rhode Island from his home state, lowering his state sales and excise tax bill by an estimated $500,000.
And former House Ways and Means chairman Charles Rangel (D-NY) used various moves to avoid federal taxes, too.
Amidst steadily rising taxes, politicians have evaded and defrauded. Rep. Walter Tucker (D-Calif.) resigned from the House of Representatives in the mid-'90s due to charges of income tax fraud and bribery committed while he was mayor of Compton, Calif.
Rep. James Traficant was convicted of tax evasion, along with bribery and racketeering charges, and was sentenced to serve time. The late Sen. Ted Stevens (R-AK) was found guilty of tax evasion, among other things, in 2008; Rep. Randy Cunningham (R-Calif.) pleaded guilty to income tax evasion, among other charges, in 2005. Former Treasury Secretary Catalina Villalpando under President George H. W. Bush also pleaded guilty to tax evasion in the early '90s.
This occurred even though the IRS for years had an office on Capitol Hill to help Congressmen with their own personal taxes -- meaning, to help them figure out the tax law they themselves wrote.
Because of its complexity, the federal tax code even trips up the IRS itself as its workers provide wrong answers to taxpayers. That's why the agency is now called America’s Museum of Mass Confusion by the Heritage Foundation.
Its complexity has even tripped up the man charged with overseeing it, Treasury Secretary Tim Geithner.
Continue Reading Below