Editorial Board

The Facebook Founder Who Unfriended America

Facebook’s initial public offering reminds us of a story.

Once upon a time, there was a young man who fled his homeland (Brazil) because his life was in danger (kidnappers). Like so many before him, he came to the United States. There, in the safety of the freest, most dynamic country on earth, he got a superb education (Harvard), the opportunity to exercise his entrepreneurial zeal (Facebook) -- and the protections of the U.S. legal system to safeguard the fruits of his labor.

That man is Eduardo Saverin, age 30, co-founder of Facebook and someone who stands to be worth about $2.89 billion when the company’s shares are loosed on the world this week. He’s also someone who, coincidentally, has renounced his U.S. citizenship in exchange for residency in Singapore.

Singapore has much to commend it. Superb food. Clean streets. Lush plant life. It also has very favorable rates of taxation on capital gains -- zero percent versus 15 percent in the U.S.

It seems fair to ask, then, if Saverin switched national allegiances to avoid U.S. taxes. He says he filed his papers to give up citizenship in January 2011 and that the move “had nothing to do with taxes.” And we take him at his word. But the timing of the news -- the IRS released his name April 30 as part of its quarterly publication of “Individuals Who Have Chosen to Expatriate” -- has raised the issue, and the circumstantial math is compelling: Saverin’s move could save him $67 million in federal taxes, according to Bloomberg.

One can believe, as we do, in free markets, open borders, and the need for goods and capital, human and otherwise, to flow across them with ease, and still feel mildly unsettled by Saverin’s decision -- just as we find it discomfiting when U.S. corporations contort themselves to seek out overseas tax havens.

A debt is owed to the country you call home, whether you were born here or arrived under duress. Arguably, that debt is deepened if the freedoms your country afforded you helped create the conditions for your success.

Whatever you want to say about U.S. tax rates -- and we have argued for reform and a flattening and simplifying of rates -- they are “our” tax rates, the ones our balky democracy has put in place. And whatever you want to say about Mark Zuckerberg, Facebook’s boss, he made the choice to pay his taxes in California -- his golden, struggling, adopted state, whose coffers he is sure to enrich.

As for Saverin, well, it would have been nice if he’d made a similar choice. Since he didn’t, perhaps the best we can wish for him now is a longer than normal wait at U.S. customs.