WASHINGTON -- Two senators on Thursday denounced Facebook Inc. co-founder Eduardo Saverin as a tax dodger for renouncing his U.S. citizenship ahead of the company's initial public offering and introduced legislation to punish him and others who leave the country to duck big tax bills.
"This is a great American success story gone wrong," said Sen. Charles E. Schumer, D-N.Y. "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."
Schumer's harsh assessment came as Facebook, in one of the largest initial public offerings of stock ever, said it is raising at least $16 billion for itself and its early investors in a transaction that values the world's definitive online social network at $104 billion. Facebook priced its IPO at $38 per share, at the top of expectations. It is selling just a portion of its shares.
The $38 price means all of its shares will be worth about $104 billion, giving the company a market value higher than Amazon.com and other well-known companies such as Kraft, Disney and McDonald's.
It's a big windfall, and it refocused attention on Saverin who renounced his citizenship "around September" of last year, according to his spokesman Tom Goodman.
The Brazilian-born resident of Singapore is one of several people who helped Mark Zuckerberg start Facebook in a Harvard University dorm, and he stands to reap billions after the IPO.
The 2010 movie "The Social Network" added to Saverin's fame after actor Andrew Garfield portrayed him as a scorned Zuckerberg friend who provided the company's early financing, then was squeezed out.
Schumer and Sen. Robert Casey, D-Pa., said they will introduce the Expatriation Prevention by Abolishing the Tax-Related Incentives for Offshore Tenancy Act, also known as the Ex-PATRIOT Act.
Among the penalties they envision would be a ban on re-entering the United States for anyone who the IRS determined renounced citizenship to avoid paying taxes.
Schumer said Saverin could save $67 million to $100 million by renouncing his citizenship and moving to Singapore, which has no capital gains taxes.
Under the proposed law, any person with a net worth of $2 million or an average income-tax liability of at least $148,000 over the previous five years who renounces U.S. citizenship would be presumed by the IRS to have done so to avoid paying taxes. That person would have to prove otherwise to the IRS.
"Under current law, Mr. Saverin would get away for free. But Senator Casey and I have a status upgrade for him -- pay your taxes in full or don't ever try to visit the U.S. again," Schumer said. "The despicable trend that Saverin exhibits must be stopped dead in its tracks."
In his first comments on the controversy, Saverin told the New York Times that his move "had nothing to do with taxes."
"I'm not a tax expert," he said. "We complied with all the known laws. There was an exit tax."
But Schumer and Casey said they believed Saverin renounced his citizenship to save millions in tax payments and said his move was even more galling because Saverin came to the United States as a boy because his family feared kidnappers in his native Brazil.
"I think it's clear to anyone looking at this that this is an insult to the American people," Casey said. "When you have someone in Mr. Saverin who benefited tremendously from our education system, from our free-market capitalism, from all the liberties and freedoms we enjoy, and then to take that wealth and try to avoid taxes in this manner I think cries out for some basic justice."
A 1996 law allows the attorney general to bar anyone from re-entering the country who renounced U.S. citizenship to avoid paying taxes. But Schumer said there is no mechanism for the attorney general to determine that tax avoidance was the reason for renouncing citizenship.
Because of the law's loophole, nobody has ever been barred from re-entry for tax avoidance. The Ex-PATRIOT Act would close the loophole by giving the IRS the authority to make that determination and share the information with the Justice Department, the lawmakers said.
Meanwhile, Zuckerberg and Facebook's engineers were ringing in the IPO on their own terms. The company was holding an overnight "hackathon" Thursday, with engineers staying up writing programming code to come up with new features for the site.
This morning, Zuckerberg will ring the Nasdaq opening bell from Facebook's headquarters in Menlo Park, Calif.