Facebook Tax Dodgers: Profit Off the People and Run

Facebook Tax Dodgers: Profit Off the People and Run


There used to be a saying: “You don’t have to do anything but pay taxes and die.”

But if your name is Mark Zuckerberg or Eduardo Saverin, you are the co-founders of Facebook, and your company is set to go public this Friday in an IPO, you’ve earned the privilege to avoid one of those absolutes. Federal tax laws are such that Zuckerberg can restructure his ownership in the company and get away with paying no personal income taxes at all – and he could do just that, the New York Times reports.

Meanwhile, Saverin, a Brazilian-born naturalized US citizen since 1998, didn’t even wait for the day when the $96 billion-dollar valuated company starts selling off shares for about $38 a pop this week.  Homeboy, who lives comfortably in Singapore, announced last week he was expatriating to avoid paying capital gains tax on the killing he was about to make, a move which made him the instant “hero” of some conservatives and the tea party.

Forbes Magazine’s John Tamney wrote a piece “For De-Friending The U.S., Facebook’s Eduardo Saverin Is An American Hero,”  lauding Saverin for escaping what is a duty of American citizenry and what enables most civilized First World nations to function as efficiently as they do.

Tamney’s probably the same type that would decry welfare for the poor while looking the other way at tax-payer subsidized welfare to corporations in the form of tax shelters and loopholes. He’s also the same kind of guy who would cry “Where’s the Marines?” or “Where’s the police?” when the country is attacked or an emergency happens.  What do you think pays for national defense and public safety, Tamney? IOUs? Oh, the hypocrisy and irony.

But okay, sure.  Go ahead and rescind the privilege of U.S. Citizenship that millions around the world would kill and die for just so you can have more.  I’ve seen Hotel Rwanda. Let a coup d’etat go down in Singapore, expect to see Saverin’s sad face among the non-citizens that get left behind when U.S. Marines rush to helicopter their own out of harm’s way.  But with all his millions, he’d probably have access to private exit anyway, right?

No one knocks innovation and ingenuity. And, of course, people should be rewarded for using their brains, skills and the gumption to create a platform that has altered the way people communicate and connect with one another worldwide.

But recall how that wealth was built.  Users have the ability to share updates with high school friends they would have otherwise never kept up with. Companies connect better with customers. Political candidates and officials get better access to voters and constituents.

To monetize its near 1 billion users Facebook, along the way, sold off access to user’s private information and personal browsing histories to third party advertisers – and only got a slap on the wrist when they were caught by the feds.

And now that it’s reaped the benefits of our collective addiction – plus personal and private preferences – paying a percentage of what everyone else pays in order to co-exist isn’t what these co-founders want to do.

Forget the fact that the corporate tax rate has been at its lowest in years. Corporate taxes are expected to raise just 1.3 percent of GDP in revenue this year, about a third of what it was in the 1950s.  Ignore the fact that money from this low rate not only supports government programs and services (programs and services their loyal users who’ve helped make them rich take advantage of), but also for benefits that wealthy executives and business owners enjoy, too.

Zuckerberg thinks his $100 million donation gimmick to Newark, NJ public schools gets him off the hook.  But, think transportation, police, energy and research and development. Think highway interstates, the public education of workers, and other infrastructure.  Without any of that, where would he be?

Even successful business man and Republican GOP nominee Mitt Romney has recognized the importance that taxes have for helping sustain our economy.  In a February 2012 Wall Street Journal op-ed, Romney explained why tax rates should be lowered and not so astronomical that they discourage companies from hiring, investing and staying in the United States.  But, not once did he argue that most should be bottomed out at zero for all businesses.

Easy come, easy go.  At some point, an even more innovative social media platform may come along and convince most users to navigate away from Facebook. Some have tried *cough* Google Plus *cough,* but none has yet to replicate the success of Facebook.  And it will be hard to sway users away after they’ve built out accounts, albums and friends list.

But when and if Facebook falls out of fashion and eventually loses the lion share of users, the tax dodgers will still be rich.

God bless America which empowers folks to rise from nothing to one day skirt responsibility to those who helped them along the way.


  1. So much angry writing. While it definitely doesn't seem right to describe the decision as the making of an American Hero, I wouldn't expect a Brazilian born converted US citizen to self identify American as a DUTY. If it saves a ton of cash, to henceforth merely visit the country wherein he lost out on ~30% of a ~90 billion dollar ownership, I'd be surprised if some sense of duty factored in.

    Singapore is first world and Rwanda is third. And they almost exemplify the gap as widely as possible. Marines don't always swoop in to help US Citizens abroad. Those kind of embassarial rescues, E.G. in Lebanon, are done with planes where most of them embarrassingly don't end up full despite there being no lack of qualified persons wishing to board. And yet, they often contain non-us citizens with strong business ties.

    • Instead of complaining of a man keeping what HE EARNED, why doesn't writer offer some solutions to problems of Rwanada? Wait no can't do that as it was the Hutu and Tutsi that were killing wach other to keep their power and money thru genocide while Singapore was working (after helping US defeat the Japanese in WW2). Don't like the tax code, change it. Me, I support doing away with IRS and 16th Amendment and work toward that goal.

  2. Your have to blame the tax code that permits investors to acquire wealth and delay taxes until the assets (i,e, shares of stock) are sold. If there was a small 2% net wealth tax each year and low income tax rate there would be no reason to flee the US.
    The US is the only developed country without a VAT and that is why our business tax rates are so high. It is political arrogance and economic suicide not to add a small VAT to the tax blend and reduce the 35% corporate tax rate. The only rational reason for eschewing a net wealth tax is the sacred cow of avoiding “double taxation”. This common knee jerk reaction fails to appreciate the potential benefits of very low rates and delayed taxes (i.e. much better to tax 8% of income now and 2% of retention for each of the next 10 years than to tax 28% now).
    Consider the 2-4-8 Tax Blend which can be described in one sentence. Tax individual and corporate income at a flat 8% rate (with no deductions, credits or loopholes), tax individual net wealth at 2% (excluding $15,000 cash and retirement funds) and impose a 4% Value Added Sales Tax (VAT) on business. The 2-4-8 Tax Blend has the lowest rates and will produce about $500 billion more than current federal revenue with no need for payroll, estate, and capital gains taxes or deferral of foreign income.
    Eugene Patrick Devany, JD, MPA http://www.TaxNetWealth.com