Sen. Hatch: Tax code at fault for Facebook founder renouncing citizenship

{mosads}Hatch’s spokeswoman, Antonia Ferrier, chastened Democratic Sens. Charles Schumer (N.Y.) and Bob Casey Jr. (Pa.) for seeking to punish the wealthy co-founder of Facebook for renounced his U.S. citizenship just a few months before he stood to gain millions in the social networking site’s initial public offering.

“You’d be hard pressed to find anyone applauding someone renouncing of his American citizenship to avoid his tax bill,” Ferrier said in a statement. “But as usual, the response from the other side of the aisle is a talking point rather than a real solution.” 

Schumer and Casey earlier on Thursday introduced a bill, the Ex-Patriot Act, would punish any individual who renounces their citizenship and has a net worth of $2 million or an average income tax liability of $148,000 over the last five years.

If the Internal Revenue Service determines that person gave up their passport for primarily tax reasons, the person’s U.S. assets would be taxed at 30 percent and they would be barred from ever re-entering the United States.

Schumer and Casey, while unveiling the legislation, predicted bipartisan support for the measure that would both punish Saverin and prevent others from taking similar actions. But Hatch expressed disapproval for their approach.

“The root cause of the problem — an archaic tax code and massive tax burden that incentivizes people to do something like this — must be fixed,” Ferrier continued. “Tax reform would not only be a more effective way of discouraging people from emigrating from the United States, but would also ensure that the United States remains competitive in the global economy. Unfortunately, as a senior Treasury official told the Senate Finance Committee last week, the Administration has no plans of unveiling any sort of tax overhaul plan before the election.”

Saverin has denied that he renounced his citizenship for tax purposes, and also pointed out that he paid an exit tax, based on his assets, before leaving the country. Saverin has lived in Singapore since 2009.