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Interview with Senator Chuck Schumer

Interview with Senator Chuck Schumer

By John King, USA - May 17, 2012

KING: You may not be as familiar with Eduardo Saverin unless you're a Facebook junkie or saw the movie, "The Social Network." Saverin is a co-founder, and his stake could be worth some $3 billion. Here's where it gets tricky. He renounced his U.S. citizenship last year and now lives in Singapore. Two U.S. senators say he knew this big payday was coming, and it's all a calculated tax cheat.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER (D), NEW YORK: This tax avoidance scheme is outrageous. Eduardo Saverin wants to defriend the United States of America just to avoid paying taxes. And we aren't going to let him get away with it.

(END VIDEO CLIP)

KING: Now, Saverin insists that's not so. In a statement today, he said, quote, "I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen. He says the congressional debate is based on, quote, "speculation and misinformation."

But, remember what he said in that statement. Tax experts we consulted say that since Saverin is no longer a U.S. citizen, he's not subject to taxes he would otherwise have to pay. Senator Schumer says that's in the ballpark of $67 million, and he wants to make sure the treasury gets the money.

(BEGIN VIDEOTAPE)

KING: There are some who would question whether you can do this retroactively and whether it's constitutional.

SCHUMER: It's absolutely constitutional. We are not just aiming it at Saverin but the close to 10,000 people that have renounced their citizenship since 2003. All the effects will be prospective. They can't enter the United States, period, no matter what. Right now, they can just get a visitor's visa to come in, as if nothing happened.

And second, in the future, not in the past, they'll have to pay taxes on any dividends, interest income, capital gains that they earn at the rate of 30 percent. And that's like changing any tax law. Just because you were taxed at 20 percent five years ago doesn't mean you have to be taxed at 20 percent next year.

KING: And so essentially, you're telling Mr. Saverin and others like him, either pay up or kiss the United States good-bye and never set foot in her again?

SCHUMER: Never set foot in it again, and you will pay a price for investing here, too.

KING: I want you to read something from Ed Kleinbard, who you probably know, the former chief of staff of the joint committee on taxation. He essentially agrees with you. He says, "I'm troubled by the Saverin expatriation. But it would put the IRS in a very awkward position if it were required to investigate an individual's state of mind as opposed to what they actually did."

How do you enforce it? Because some people would give up their citizenship, either for a political reason or moral reason. Perhaps even for some employment reason.

SCHUMER: We give them a chance to make their case, but the burden of proof is on a tax -- tax avoider. In other words, the presumption is that, if you leave the country and pay much less in taxes, that that's the reason you did it, but you have a chance to rebut it. And if you make a strong case, you won't get the penalties that we propose in our legislation.

I doubt Mr. Saverin would be able to prove that. He chose Singapore, a place that has zero percent tax on capital gains.

KING: I want you to listen to your co-sponsor, Senator Bob Casey of Pennsylvania. This is obviously a dramatic story, the Facebook IPO. It's been on the front pages not only in the United States but all around the world. Here's how Senator Casey put this.

(BEGIN VIDEO CLIP)

SEN. BOB CASEY (D), PENNSYLVANIA: We've got troops overseas that are sacrificing on our behalf every day for what -- all the values that we hold dear. And Mr. Saverin spits in their eye. He spits in the eye of the American people when he does this.

(END VIDEO CLIP)

KING: Is that a bit over the top? I understand your outrage here. And I understand your point that you feel he should pay taxes. Is he spitting in the eyes of the troops and everybody else?

SCHUMER: It's particularly confounding that Saverin, by his own admission, came to this country from Brazil to seek safety, because his family was being threatened by various gangsters. I think they were a family that had some means in Brazil.

He comes here. Because of the American dream and the American way, he becomes very rich, God bless him. And then as soon as he makes all that money, he leaves. He doesn't strike me as somebody of -- you know, you wouldn't see that story on someone who really had moral -- high moral character.

KING: Senator Schumer, appreciate your time tonight.

SCHUMER: Thank you. Appreciate it.

KING: Take care, sir. 

John King, USA

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