Proposed Law Would Penalize Facebook-like Ex-Pats

Even a 15% capital gains tax is too much for some people.  At least that’s the view in Congress where a new law, called the Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act, has been proposed. It came just a day before Facebook was set to go public and its owners stood to make billions. One owner, Eduardo Saverin, renounced his U.S. citizenship last September in favor of Singapore; there’s no capital gains tax there.

The new law would:

• Impose a 30% capital gains tax on individuals who renounce their U.S. citizenship to avoid taxes
• Bar such individuals from entering the U.S.

The new law would only apply to wealthy individuals. This would be defined as those having a net worth of $2 million or more, or average annual tax liability of at least $148,000.