Monday, May 21, 2012
Senator Schumer May 21, 2012 Add a comment Pseudo-Constitutional scholar Sen. Schumer targets Facebook co-founder
Times are tough in America when businesses and private citizens leave the land of opportunity and pursue sanctuary status in foreign countries with friendlier tax options. Unfortunately for Congressional big spenders, that is exactly what wealthy individuals will continue to do if the “land of the free and home of the brave” taxes, spends and regulates its residents to death. The latest example of Congress’ unconstitutional strong-arm tactic takes aim at Facebook’s co-founder, Eduardo Saverin’s decision to turn in his 10-year old U.S. passport before making millions from the social network IPO. The ex-Brazilian/American chose Singapore’s tax-friendly shores as his new home. While the United States already charges an exit tax, it’s far cheaper to set up shop in Singapore where Saverin’s future earnings will enjoy lower taxes and no capital gains levies. The move wasn’t rocket science. Saverin’s financial planners looked at the anti-capitalist rhetoric President Obama preaches on a daily basis like proposed tax increases of 24-30 percent in the yearly federal tax bill under the Buffet Tax Rule. Also “taxmageddon” is set to hit most Americans in January 2013. All Americans making more than $30,000 will pay Uncle Sam more when the Bush tax cuts expire and the new “Obamacare” taxes kick in. The ex-Brazilian/American would also likely face Obama’s proposed 44 percent dividend tax as well as a 45 percent estate tax. In California, Facebook’s headquarters, Saverin would be further subjected to a barrage of taxes especially if voters decide to give themselves a tax increase in November to pay for the falling tax revenues from businesses and residents fleeing the once Golden State. Looking at the mounting financial duress America’s lawmakers offer its citizens it‘s no wonder why some of the wealthy are leaving, businesses are holding back expansion and stubborn unemployment rates persist. The jig is up in America. The country owes more than 16 trillion dollars, continues to fight wars in the Middle East where Americans receive no benefits in return, like oil or rare earth minerals, and Congress fails to address the drivers’ of entitlement spending. To make matters worse the dysfunctional and ill-informed Congress thinks they can dictate a new law targeting a particular individual. In a “rule of law” society no one is treated special and lawmakers do not act in a totalitarian manner. However, that’s exactly what Senator Chuck Schumer (D-NY) and Bob Casey (D-PA) are doing when they target the Facebook co-founder for oppressive exit taxes. Their proposed legislation would force Saverin to pay all taxes as a U.S. citizen for his IPO profit (even though technically he is not a citizen) or be banned from reentering the country for life. While critics call the social media tycoon unpatriotic, it’s important to remember he has only been a resident for 10 years. “I was born in Brazil, I was an American citizen for about 10 years. I thought of myself as a global citizen,” Saverin told the New York Times. The fact Saverin paid hundreds of millions in taxes is of little concern to Senators Schumer and Casey. Their proposed law would impose a 30 percent capital gains tax for any wealthy citizens trying to dump America in favor of lower taxes in a plethora of countries around the world. However, unbeknownst to Schumer and Casey, there is already a provision in the U.S. Constitution known as the bill of attainder clause that prevents Congress from targeting a single person. Schumer even admitted to Bloomberg “10,000 people in the last 10 years have renounced their citizenship. Not a single one has been penalized.” Nevertheless the Constitution prevents Congress from singling out an individual or group for punishment without a trial and is made clear in the Federalist Papers. “Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ...,” James Madison, Federalist Number 44, 1788. The clause seems pretty clear. Plus, the U.S. already charges an exit tax according to Forbes. “If you are a U.S. citizen or long-term resident who expatriates on or after June 17, 2008, you will be deemed (for tax purposes) to have sold all of your worldwide property for its fair market value the day before you leave the U.S. All that gain is subject to U.S. tax at the capital gains rate. Plus, all your gain is taken into account without regard to any ameliorative tax provisions in the Internal Revenue Code.” “Put differently, you get all of the bad parts of the tax code, and none of the good,” Forbes explains. “That would include, for example, the inability to benefit from the $250,000 per person ($500,000 per couple) exclusion from gain on a principal residence (Section 121 of the Internal Revenue Code) and many other rules. The exit tax is like an estate tax, in the sense that everything that would be part of your estate will be subject to income tax on unrealized gains as of the day before you expatriate, as if you sold all your assets the day before leaving. In effect this is Congress' way of making sure your assets don't escape the estate tax entirely through expatriation.” The new Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” or (Ex-PATRIOT) Act will deter any tax avoidance schemes. A statement regarding the new tax bill said; “The senators will call Saverin’s move an outrage and describe a plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country.” The proposed legislation will tax, “any expatriate with either a net worth of $2 million or an average income tax liability of at least $148,000 over the last five years will be presumed to have renounced their citizenship for tax avoidance purposes,” according to Schumer. In addition to income taxes Ex-Pats would also pay a 30 percent capital gains tax. According to Democratic Senator Schumer, 1,780 people gave up their citizenship in 2011 for a number of reasons. But Schumer ignores the Facebook playboy will pay hundreds of millions in taxes upon departure. However, Schumer is concerned with the savings of approximately $67 million in taxes that Bloomberg.com estimates Saverin’s move to Singapore will save him. Lately the Republican’s have touted their spending cuts instead of imposing new taxes as a method to “fix” the country. Yet on the Sunday talk show “This Week with George Stephanopoulos” the GOP Speaker of the House, John Boehner agreed with Schumer. “There’s already a law on the books,” Boehner explained. “But this is outrageous. This is absolutely outrageous — that somebody would renounce their citizenship to avoid paying taxes. And yes, it’s already against the law…I’m not sure it’s necessary, but if it is necessary — sure I would support it.” So which is it? “The far right will go to such extremes to defend keeping taxes low on millionaires that they are even trying to turn someone like Mr. Saverin into a martyr despite his fundamentally unpatriotic act,” said Brian Fallon, a spokesman for Schumer. This latest flap inside the Beltway clearly demonstrates Congress remains ill informed regarding the Constitution and what power their role as lawmakers entails. Uninformed Senators Schumer and Casey also want to ban Saverin’s reentry into the country forever, something that doesn’t apply to illegal immigrants who repeatedly break U.S. law. In other words, Boehner, Schumer and Casey and their merry Robin Hood bandits would like to add insult to injury and tax Saverin even more and chase away any prospective entrepreneurs in the future. Perhaps the lawmaker’s time would be better served by focusing their energy on restructuring the massive ineffective U.S. tax code to encourage entrepreneurship in America that would keep rainmakers in the U.S. and lure foreign investors to the land of forgotten American prosperity. For more stories; http://www.examiner.com/homeland-security-in-national/kimberly-dvorak © Copyright 2012 Kimberly Dvorak All Rights Reserved.