BY FARHAD MANZOO
Would Eduardo Saverin have been successful anywhere else? Maybe, but not as quickly, and not as spectacularly. It was only thanks to America—thanks to the American government’s direct and indirect investments in science and technology; thanks to the U.S. justice system; the relatively safe and fair investment climate made possible by that justice system; the education system that educated all of Facebook’s workers, and on and on—it was only thanks to all of this that you know anything at all about Eduardo Saverin today.
Now comes news that Saverin has decided to renounce his U.S. citizenship, most likely to avoid a large long-term tax bill on his winnings in the Facebook IPO. Saverin owns about 4 percent of Facebook stock. By renouncing his citizenship last fall, well in advance of the IPO, Saverin will pay an “exit tax” on his assets as they were valued then. But he’ll pay no tax on income derived from stock sales in the future—that’s because he now lives in Singapore, which has no capital gains tax. It’s unclear how much this move will save him, since it depends on how Facebook’s stock performs. But let’s say the value of his stock doubles over the long run, from an estimated $3.8 billion now to around $8 billion. If that happens, he won’t pay any tax on the $4 billion increase in value—which, at a 15 percent capital gains rate, will save him $600 million in taxes.
Is this fair? No. It’s worse than that, though. It’s ungrateful and it’s indecent. Saverin’s decision to decamp the U.S. suggests he’s got no idea how much America has helped him out.
So, to enlighten him, let’s list all the ways Eduardo Saverin has benefitted from America.First and most obviously, he lived a life of relative safety in Miami, something that wasn’t guaranteed for him in Brazil. Second, also obvious: If Saverin hadn’t come to America, he wouldn’t have met Mark Zuckerberg, and—not to put too fine a point on it—if Saverin hadn’t met Zuckerberg, Saverin wouldn’t be Saverin.
Third: Harvard. Zuckerberg and his cofounders met in the dorms, and while Harvard is a nominally private institution, it enjoys significant funding and protections from the government. In 2011, Harvard received $686 million, about 18 percent of its operating revenue, from federal grants; that’s almost as much as it received from student tuition.
Would Facebook have been founded without Harvard? Perhaps—maybe Facebook would have come about wherever Zuck went to school. Still, there were social networks at lots of other schools. There was clearly something about Harvard’s student body that was receptive to Facebook.
More generally, elite, government-sponsored American universities like Harvard have been instrumental in the founding of many tech giants. Microsoft’s founders met at Harvard. Yahoo and Google’s founders met at Stanford. But even if you believe that these universities shouldn’t claim credit for the companies they brought about, it’s still hard to argue that Facebook would be where it is today without the American taxpayers’ large investment in public education. Facebook depends on really smart people to make its products. You don’t get smart people without tax dollars.
Fourth: The American government’s creation of the Internet. The strangest thing about Silicon Valley’s libertarian politics is how few people here recognize how the Internet came about. ARPANET, the earliest large-scale computer network that morphed into the Internet, was funded by the U.S. Defense Department, as was the research into fundamental technologies like packet switching and TCP/IP. Delve deeper into the network and you get to the microprocessors that run the world’s computers—another technology that wouldn’t have come about by loads of federal research grants.
Even the Web itself can trace its founding to government grants. Tim Berners-Lee worked at CERN, the research group funded by Europeans governments, when he worked on the HTTP protocol. Mark Andreessen worked at National Center for Supercomputing Applications—which is funded by in a partnership between the federal government and the state of Illinois—when he created the Mosaic Web browser.
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