Sunday, May 20, 2012

Senator Charles Schumer to Facebook Co-Founder: "Dislike"

    News that Facebook co-founder Eduardo Saverin had renounced his U.S. citizenship prior to the Facebook IPO this week really put a burr under Senator Chuck Schumer's saddle.  Schumer was incensed that Saverin appears to be avoiding taxes that he would incur should he sell his shares of Facebook that are estimated to be worth about $4 billion (LA Times):
"This is a great American success story gone wrong," Schumer said. "Mr. Saverin wants to de-friend the United States just to avoid paying taxes, and we're not going to let him get away with it."
And part of what "not going to let him get away with it" means:
...mak[ing] sure he never sets foot in the U.S. again unless he pays tens of millions of dollars in taxes he will owe after the company's initial public offering Friday. 
 By announcing his (and Sen. Bob Casey's) legislation in such a targeted way and personal way, we have the spectacle of a sitting Senator appearing to threaten a virtual Bill of Attainder to punish Saverin.  Since Bills of Attainder are specifically prohibited by the Constitution and Senator Schumer is no amateur, he and Casey will doubtless find a way to broaden the scope of the law to avoid this pitfall.  Schumer's legislative experience is particularly evident in the naming of the legislation:  "Expatriation Prevention by Abolishing the Tax-Related Incentives for Offshore Tenancy Act, a name designed to produce the acronym Ex-PATRIOT Act." (If Senators invested a fraction of the energy they use to produce acronyms to balance the budget, the deficit would vanish in no time.)
    Senator Schumer's enthusiasm to use legislation to punish the wealthy has not always run so high.  In 2007 when Democrats were considering tax increases to finance more government spending, Schumer balked.  The New York Times reported:
Mr. Schumer said in an interview that he was torn between the need to protect an industry vital to his home state and the need to generate revenues to finance government programs. He said a tax increase on private equity and hedge fund executives could lead to an exodus of jobs and companies from New York, and even from the country. He said the plan, if enacted federally, would also lead to an increase in New York State tax that would further bear down on the industry. He said he worried that the industry was being unfairly singled out. [emphasis added]
“Unintended consequences often occur when you do major tax work. And you have to be careful,” Mr. Schumer said in the interview, held in his office just off the Senate floor.
Ironically, it was the Mitt Romney-like vampires ("private equity and hedge fund executives") who are the current target of the 2012 Obama campaign that Schumer was concerned about in 2007 fleeing his home state along with their companies and jobs.  But these days, Schumer is more concerned with electoral consequences than "unintended" ones.  Although Saverin denies that taxes are behind his decision, Schumer is grandstanding with a constitutionally questionable and punitive law to score points in an election year.  The current legislation seems part of the overall Buffett Rule/tax-the-wealthy strategy the Democrats have made part of their 2012 campaign.  "The despicable trend that Saverin exhibits must be stopped dead in its tracks," Schumer scolded.  The same could be said of Schumer's cynical politcal theater.

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