Editor's Note: On Thursday, Democratic Sen. Chuck Schumer and Bob Casey unveiled legislation that would prevent Facebook co-founder Eduardo Saverin from relinquishing his U.S. citizenship ahead of Facebook's IPO in order to evade U.S. capital gains taxes and save anywhere from $67 million to $100 million in U.S. taxes. Under their legislation, Americans who renounce their citizenship to avoid taxes will be punished in two ways: They will be barred from re-entering the U.S. and their future investments in the U.S. will be taxed at a 30% rate. Saverin is currently residing in Singapore.
Patrick Weil is a Senior Research Scholar in Law at Yale Law School and a senior research fellow at the French National Research Center in the University of Paris, Pantheon-Sorbonne. His forthcoming book is entitled, "The Sovereign Citizen: Denaturalization and the Origins of the American Republic." (2012, Penn University Press) He recently wrote an article calling for a global 1% tax on the world's billionaires. We asked Patrick to share his reactions to the Senators' regulatory plan.
Will Sen. Schumer and Casey's plan to re-impose taxes on expats like Saverin after they flee from the U.S. work?
Is this the right approach? If not, what would be more appropriate? Why is a Global 1% Tax on the wealthy a good idea?
This would be a first important step. But some of these expatriates could choose to live abroad in Europe, Asia, or Latin America without caring about not being able to return to the U.S. if it means full exemption of their duties towards the American government and the American people.
For this reason, cooperation between nations is necessary. If the majority of nations of the world (or at least the most important, the EU, Russia, China, Japan, and Brazil) sign a treaty to force these people to pay their dues to the US Treasury even if they reside in a foreign territory and have adopted a foreign citizenship, this will reduce appeal of expatriation.
With the increasingly globalized world, cooperation between nation states becomes the best way for them to maintain their sovereignty and respect of their laws.