Eduardo Saverin and the Modern “Underground Railroad”

As Ayn Rand writes in her essay “Man’s Rights” within The Virtue of Selfishness, “The man who produces while others dispose of his product, is a slave.”1 Neither chains, nor whips, nor backbreaking physical labor are the defining characteristics of slavery. The only thing essential to slavery is force – the forced confiscation, expropriation, and reallocation of the values produced by one man to another man, one who had not produced them.

Man’s status as a slave is not contingent on whatever other measures of individual liberty may be allotted to him, nor does it matter exactly how much is expropriated from him. Indeed some black slaves in the Antebellum South were allowed to run their own garden plots and were even allowed to sell their produce for profit to purchase personal luxuries in town (or luxuries from the perspective of slaves). Still others were allowed to loan themselves out to employers in order to earn wages once finishing their daily tasks on their master’s plantation. However few of these cases there may have been (and, truly, these were rarities at the time), they did exist, but none of them would warrant calling the slaves that may have benefited from them “free men.” Nor could one use the term “free men” to describe those poor slaves of Soviet Russia or Communist China in the Twentieth Century simply because they possessed the ability to move from place to place. Then what is the distinguishing characteristic that unites these vastly different concrete manifestations of slavery?

As already stated, the essential characteristic of slavery is the forced reallocation of the products of one man’s labor to another man who has not earned them. With this understanding, examine the nature of taxation: the product of one man’s labor (or those of a group of men, as with businesses) is taken from him by the government to be used elsewhere at the discretion of the government. Should a man refuse to pay his taxes, the government will obtain them by force, at the point of a gun if necessary – such are the penalties for the “crime” of maintaining what rightfully belongs to you, or what the IRS and DOJ call “tax evasion.”

As such, taxation is – beyond question – an example of slavery, taxpayers are slaves, and Eduardo Saverin is a runaway.

A few weeks ago, it was released that the young billionaire co-founder of Facebook had officially renounced his U.S. citizenship and settled in the Asian city-state of Singapore. I applaud his decision, and at the same time, I thoroughly resent the forces that drove him to make it.

With the threat of new capital gains taxes looming in the States, Saverin decided that his self-interests no longer rested on our shores. In order to maintain that which rightfully belongs to him – the products of his labor, his investments, and his mind – Saverin sought refuge in Singapore, a nation with no capital gains taxes, no taxes on personal income produced overseas, no inheritance tax, a personal income tax that does not exceed 20% no matter how much one earns beyond 320,000 SGD (about $250,880), and a corporate tax rate that does not exceed 17% no matter how much profit a business earns beyond  300,000 SGD (about $235,200). Albeit, Singapore still has taxes, violations of other individual rights, and problems inherent within the very structure of its government (e.g. that it is essentially a dictatorship under the family of Fmr. Prime Minister Lee Kuan Yew), but if a slave gets to choose his master, Singapore has many traits that would make it more attractive to a man like Saverin than the United States.

But as far as some are concerned in the Senate of the United States and elsewhere, Saverin is a runaway to whose wealth they feel entitled, and they want it back. Leading the charge are Sen. Chuck Schumer and Sen. Bob Casey, two men who fancy themselves modern day slave catchers. From their perspective, they are crusading to return as much of Eduardo Saverin’s wealth to the masters they believe are rightfully entitled to it – the people of the United States. To them, the collective possesses the right to dictate the life of the individual, and it is the duty of the individual to serve the well-being of the collective. Eduardo Saverin is not entitled to his own life or the products of his own labor from their perspective – the collective allowed him to earn his wealth, as he could not have gotten rich without others to purchase his product, and therefore it is the masses who are truly entitled to his wealth and can dictate what he can and cannot do with it. In the words of Sen. Schumer, the United States “welcomed him and kept him safe, educated him, and helped him become a billionaire,” so the U.S. is entitled to his billions.  Sen. Schumer further summarized his own position succinctly on the Senate floor, stating flatly, “No one gets rich in America on their own.”

This is what I call the Robinson Crusoe Fallacy. Just because one man traded with other men and became wealthy because of it does not entitle any other men to any more value than that which they have already received through their trade. Moreover, whether or not Saverin keeps what is his is not a matter of permission – it is a matter of right. No one has any claim to his wealth except himself. He did produce his wealth on his own. He made the decision to invest in Facebook in its early years, not the American people. It was through his singular, totally individualistic decision to think and then act in his own self-interests that earned him his wealth – no one else has the right to a single cent of Saverin’s wealth.

All the same, Sen. Schumer and Sen. Casey remain undeterred. Because they feel that it is Saverin’s moral duty to live for the group and not for himself, they intend to exact that which they feel rightfully belongs to the U.S. government and not to Saverin. Both Senators jointly introduced a bill intended to punish expatriates for leaving the United States for reasons relating to taxes entitled the “Ex-PATRIOT Act,” as if the original PATRIOT Act was not bad enough. The acronym stands for the “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act.

Image from http://www.theepochtimes.com/n2/united-states/schumer-asks-ftc-to-investigate-credit-bureaus-135636.htmlIf Sen. Schumer and Sen. Casey were decent statesmen, they could achieve the purpose within the bill’s title – that is, eliminating tax-related incentives for expatriation – by simply loosening the oppressive nature of our tax structure here in the United States. Thus, the bill would lead to a system that is less unfair than the one currently in place by allowing individuals and businesses to keep more of that which they produce. If the logic of such a move was followed consistently, it would eventually lead to the end of all taxes and invite creative statesmen to derive voluntary means of government funding.

Unfortunately, Sen. Schumer and Sen. Casey are not decent statesmen – far from it. According to a description of the Ex-PATRIOT Act by Forbes contributor Jon Matonis, the provisions within the bill reek of the same statism that led to the passage of the Sherman Antitrust Act over 120 years ago, and even more shockingly, they mirror the Reichfluchsteuer, a Nazi-imposed tax on Jews attempting to leave Germany before the onset of the Holocaust (which was, incidentally, 5% less than what Sens. Schumer and Casey are recommending):

“Under the proposal, any expatriate with either a net worth of $2 million or an average income tax liability of at least $148,000 over the last five years will be presumed to have renounced their citizenship for tax avoidance purposes. Unless the individual can convince the IRS that they haven’t done so for tax purposes, the IRS will prospectively impose a capital gains tax of 30% on the individual’s future investment gains, no matter where he or she resides.” [Emphasis added.]

Additionally, any individuals that are unable to convince the IRS of their innocence yet reject paying their taxes anyway will be permanently banished from the United States, unable to reenter the country even to visit their friends and family. The bill, if passed, would apply to all individuals who have renounced their U.S. citizenship over the last ten years.

Though expatriation is not currently a crime, these two senators intend to make it one – they intend to punish those who leave this country in the defense of their own property. Regardless of whether the senators intended this law to be classified as criminal law or not is irrelevant – it is an ex post facto law, meaning that it intends to punish individuals by making something illegal which was not illegal before the law was created. This is constitutionally forbidden in clause 1 of Article I, section 10 in the Constitution of the United States.

Though the senators may argue that they are not criminalizing expatriation because one “can still leave if he wants to,” that is the same as saying that, despite immense taxes on cigarettes (a product of which I am certainly no fan), one can still purchase and smoke them. The intent of both laws is to punish behavior with which the government disagrees but is too cowardly to simply make illegal, as they recognize the political suicide in doing so. As such, they intend to accomplish the same through the back door. Though the law itself has no merits, this fact alone that it is an ex post facto law is enough to strike it down on constitutional grounds.

But what is really interesting is the design of the law: individuals making a certain amount of money are “presumed to have renounced their citizenship” to avoid taxes, and they must convince the IRS of otherwise, lest they be punished. Though you cannot see it, reader, know that my sense of virulent indignation is clearly visible in my face as I write this.

This is an exact repeat of the structure of the Sherman Antitrust Act of 1890 where men – not just any men, but rich men, successful men, businessmen – are compelled to face a group bureaucrats with whom the future of their property – the products of their labor, their ingenuity, their reason, their mind – resides, while the label of guilty is stamped on their foreheads before they even enter the room. This is unacceptable.

Though Saverin has been very cautious to not attribute the differences in tax structure between Singapore and the United States to his actions, it is hard to believe that he was driven by anything other than his own self-interests. Were he not, he’d still be here in the United States, already sniveling at the feet of politicians and proclaiming his “duty” to others, just as Warren Buffet has done and is doing. Why should he be forced to speak in ambiguous terms, claiming he did it for “speculation” rather than to benefit from the tax system in Singapore? Because should this law pass, he is already presumed guilty and must convince IRS agents of his innocence – there cannot be a single spot, and he must demonstrate that there is not a single spot on his record as far as the IRS is concerned or face severe penalties.

That men should have to enter a courtroom and convince their accusers of their innocence at all is intolerable, but that they should have to do the same before the IRS and that they were specifically targeted not for their sins, but for their virtues – their productive abilities and the wealth that only they were able to achieve through them – imbues the government of the United States with the same moral character of the great dictatorships of the Twentieth Century — perhaps not yet in degree, but certainly in principle.

Fortunately, the bill is not likely to pass, at leaPhoto by Gage Skidmorest as far as one can tell. Many Americans have done well to express a great deal of support for Saverin’s decision. For example, Grover Norquist, the leader of the Americans for Tax Reform, was quick to point out similar laws passed by the Nazis prior to WWII to punish Jewish expatriates, meaning the aforementioned Reichfluchsteuer – not exactly a difficult comparison to make, as our nation teeters ever closer to fascism, that is, socialism with nominal but ultimately nonexistent property rights (the Nazis, after all, were the National Socialists). Additionally, the Republican-dominated House does seem opposed to Sen. Schumer and Sen. Casey’s proposal, so prospects for Saverin’s flight from America being a successful one look promising for the time being.

Sen. Schumer, on the other hand, literally cannot comprehend the support Saverin and other rich expatriates are getting in response to this issue: “Can you believe it? An American hero? Renouncing your citizenship now qualifies as heroic for the hard right wing?” Yes, Sen. Schumer. Yes it does. In the words of Benjamin Franklin, a revolutionary and expatriate in his own right, “Where Liberty is, there is my country.”

I feel no particular devotion to the United States beyond the values for which stands – or once stood. My self-interests are not a matter of loyalty to any individual or institution, but instead are for the values which they embody. If such people and institutions begin to falter in those values – not only falter, but even attack them and me, what good would it serve me, or Eduardo Saverin, to continue associating with such people or institutions simply because “that is how it has always been?” It does no good, and instead becomes harmful.

Such is the reason why Eduardo Saverin is not alone. Since 2008, the number of U.S. citizens renouncing their citizenship has gone up nearly eight times from 235 expatriates in 2008 to a record-setting 1,780 people in 2011. Dwell on that for a moment – 1,780 people renouncing their citizenship to the United States of America, once the freest (though still one of the freest) nation on the face of the earth, a shining example of man’s limitless capability to expand, produce, and improve his life on this earth. This should not be.

But for those individuals for whom the burden has become too much to bear, the time has come to pack their things and flee their masters. But the modern runaways are not fleeing north any longer – Canada and the northeastern United States no longer provide refuge. Instead, these runaways head for the Orient, with city-states Singapore and Hong Kong being the most attractive destinations (Hong Kong the most of all, having even lower taxes than Singapore and a functioning republican government). They no longer run through the woods, but fly on jets, speeding away from the governmental nightmare erupting behind them, but even then they try not to draw attention to themselves – Saverin, for example, renounced his citizenship in September of 2011, but it did not become known (or well known, at least) until months later.

For many of us, however, the threshold has not been met for leaving the United States. We’re still content with fleeing from state to state rather than from the States in totality – compare the regulatory and tax structure of those states that grew the most in terms of population according to the last census and those that shrunk. Certainly, those far richer than I am suffer more substantial losses to their self-interests than I currently do, and as such, it still serves my self-interests to remain in the United States and attempt to improve the situation.

But for Saverin, that ship had sailed. It did not serve his interests to stay and fight the government for what rightfully belongs to him anyway. Ultimately, he found that it better served his self-interests to traverse an ocean (and cultural barriers) in order to live under a dictatorship than to continue living in the United States. What, then, does that say about the current state of our government? If Eduardo Saverin was made a “patron saint” for low taxes, in the words of Sen. Schumer, through the renunciation of his U.S. citizenship, then Sen. Schumer’s “Ex-PATRIOT Act,” if passed, will surely make him a martyr.

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  1. Rand, Ayn. “Man’s Rights.” The Virtue of Selfishness, 94.

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