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Senators Charles Schumer (D-N.Y.) and Bob Casey (D.-Pa.) took aim at Facebook co-founder Eduardo Saverin last week. The Brazilian-born entrepreneur says he renounced his U.S. citizenship to help facilitate a permanent move to Singapore, where he has been living since 2009.
But the Senators don't believe him, and have accused him ditching the U.S. in an attempt to avoid paying post-IPO taxes. Upset by this, they've introduced legislation known as the Ex-PATRIOT Act. If passed, it would ban Eduardo Saverin from the U.S.
Can Congress do this?
First, let's take a look at the facts. Eduardo Saverin must still pay hundreds of millions of dollars in expatriation taxes, which are based on the pre-IPO value of his Facebook shares. But because Saverin renounced his citizenship before we knew the true value of Facebook, Senator Schumer claims he will save anywhere between $67 and $100 million, according to the Los Angeles Times.
The Ex-PATRIOT Act targets people who take advantage of this rule. An individual who has a net worth of over $2 million is presumed to have renounced his citizenship in order to avoid taxes, explains TechCrunch. These people will be subject to a 30% capital gains tax no matter where they live and will be banned from the U.S. forever. The legislation covers the last 10 years.
Whether Congress can ban Eduardo Saverin in this way likely depends on whether the Ex-PATRIOT Act is a bill of attainder. Bills of attainder are legislation that specifically punish named or easily ascertainable people. They're a form of "trial by legislature."
The law in this area is murky. On one hand, we know that the Act is designed to punish Saverin. Senators Schumer and Casey have said so themselves. However, it actually affects a large group of people, many of whom are unknown and who have yet to renounce their citizenship. There are good arguments on both sides of the question.
And for those wondering about the Constitution's ex-post facto clause, it doesn't apply. The Senators are trying to ban Eduardo Saverin within the civil justice system. The clause only applies to criminal laws.