Facebook co-founder Eduardo Saverin will save at least $67 million in federal income taxes by dropping U.S. citizenship, according to a Bloomberg analysis of the company's stock price. Those savings will keep growing if Facebook's shares increase.
Saverin renounced his citizenship around September and lives in Singapore, said his spokesman, Tom Goodman. Saverin, 30, was part of a small group of Harvard students who started the social networking site. He owns about 4 percent of the company, according to whoownsfacebook.com.
The would-be savings underscore why more people are giving up U.S. citizenship before potential increases in taxes for the highest earners. The value of Saverin's stake has swelled along with increases in Facebook's share price before its planned initial public offering.
Saverin's capital gains tax liability comes "at a time when the rate is probably the lowest it ever will be, and it's a substantial discount to the value of what his position in Facebook will likely be two weeks from now," said Edward Kleinbard, a tax law professor at the University of Southern California in Los Angeles.
Any profit from future appreciation of Saverin's Facebook stock will be earned free of capital gains tax in the United States and Singapore, which doesn't impose the tax.