In Defence of Eduardo Saverin

If a tax evader is someone that actively attempts to minimize his tax burden than Eduardo Saverin is a tax evader. A Facebook co-founder Eduardo Saverin has given up his US citizenship and moved to Singapore. The effective tax rate in Singapore is of only 20% and by giving up his American citizenship before last Friday’s 16 Billion dollar IPO Saverin stands to save hundreds of millions of dollars in capital gains taxes. Whether he admits it or not he is a tax evader. However he is not a tax cheat. What he has done is legal, moreover it is also moral. Avoiding taxes is never really frowned upon until American politicians get involved. Was Bill Gates lambasted in the media for setting up shop in a state with no income tax where he probably saved Billions in dollars in taxes? No he was lauded for helping reserve the US’s hegemony in the information technology sector.

Why has Saverin received no equivalent praise? He was the first investor in Facebook plucking his life savings into an idea that would probably never have developed into the phenomenon it now is. Without Saverin there might never have been a Zuckerberg. Can you imagine the risk involved in putting thirty thousand dollars of your savings into your friends company based on nothing but entrepreneurial faith?

Democrats and left leaning media often like to remind people that they ‘owe’ their wealth to the country that cradled their aspirations, educated them and provided the consumers to underpin their wealth. This whole social contract idea is their main justification for gouging the wealthy with taxes. But should Saverin and Zuckerberg be thanking America for their success or should it be America thanking them? America was built on the entrepreneurial and industrious spirit of its citizens, without entrepreneurs their would be no America, at least not as we know it today. Without taxes dependent on the wealthy there would be no medicaid, medicare, government backed student loans or military, so one could probably be excused for believing that society owes as much to the wealthy as they do to society.

In any case Facebook’s success cannot only be attributed to America alone. Facebook did not receive any meaningful business press coverage or Hollywood interest for that matter, until it reached 500 million users or roughly double the internet population of the US. At almost a Billion users much of Facebook’s success can be attributed to its global reached and not its American footprint. Without Saverin initial investment there wouldn’t be a Saverin to tax.

What is more worrying though is not the accusations of immoral wealthiness but rather the legal ramifications of some political fomentations against the Facebook co-founder. Attempts to legislate against individuals rights to choose their country of residence even for tax purposes is Orwellian indeed. One’s right to vote with his feet is probably the most important right of all. Enshrined in the American Constitution is the right to free mobility, why can this right be stopped at the border, are we talking about the US or the USSR here? Wealth leaving a country is the price to be paid for choosing high taxes that aren’t globally competitive. The price to be paid for imposing mobility restrictions on capital however will be tantamount to putting a stop sign at the borders entries not just exits. Saverin is of Brazilian of origin and chose the US for its perceived liberties commercial and otherwise, how many future Saverins, Sergei Brins or George Soroses will chose Singapore from the get go instead of New York and California.

There will be a high economic price to pay for this liberticide political behaviour and that is the real scandal here!