Eduardo Saverin And Echoes of the Reichsfluchtsteuer

The Reich flight tax that the Nazis imposed on Jews trying to flee in the 1930s was 25 percent. Democrats want Saverin to pay 30 percent.

Call it the return of the Reichsfluchtsteuer.

The president of Americans for Tax Reform, Grover Norquist, did not use the term. But that is what Mr. Norquist was talking about when he spoke to The Hill newspaper about the legislation proposed by Senator Schumer, the Democrat of New York, to tax at a 30 percent rate the $2 billion capital gains of Facebook co-founder Eduardo Saverin, who renounced his American citizenship before Facebook’s initial public offering.

"I think Schumer can probably find the legislation to do this. It existed in Germany in the 1930s and Rhodesia in the ’70s and in South Africa as well,” Mr. Norquist said. “He probably just plagiarized it and translated it from the original German."

The Reichsfluchsteuer, or Reich flight tax, that the Nazis imposed on Jews trying to flee in the 1930s was 25 percent; Mr. Schumer and his Senate colleague Bob Casey, Democrat of Pennsylvania, want 30 percent. Give Mr. Schumer some credit for creativity, Mr. Norquist; the New Yorker did not just translate, he also raised the rate.

(Mr. Norquist’s own comment, like Mr. Schumer’s legislation, had its precedent; it was a variation on Molly Ivins’ comment that Patrick Buchanan’s speech to the 1992 Republican National Convention had sounded better in the original German.)

Mr. Schumer is an easy target, but the blame for this one is bipartisan, as is so often the case in Washington. The speaker of the House, John Boehner, a Republican, told ABC News’ “This Week” program that Mr. Saverin’s exit from America was “outrageous” and that he would support Mr. Schumer’s legislation if it is necessary to prevent people from leaving America to avoid taxes. The law that imposed the exit tax Mr. Saverin was trying to avoid, the Heroes Earnings Assistance and Relief Tax Act of 2008, was signed into law by a Republican president, George W. Bush, after being passed in the Senate by unanimous consent and in the House by a vote of 403 to 0.

Mr. Schumer would surely bridle at having his exit-tax policy compared to that of the Nazis, as would Mr. Boehner, so let me be clear: The Reichsfluchsteuer was originally imposed not by the Nazis, but, rather, on December 8, 1931, by the pre-Hitler, centrist government of Heinrich Brüning, who had a doctoral degree in economics.

As Howard Ellis wrote in Exchange Control In Central Europe, published in 1941 by Harvard University Press, “it is worth remarking that the National Socialists inherited it from Social Democrat supported coalition governments after nearly two years of elaboration.”

Others have observed that it is not the only parallel that can be drawn between today’s era and the Weimar Republic, which featured high unemployment, deficits, and the threat of inflation.

Ellis writes that the exchange control policy remained in place “because it was an instrument par excellence of political power,” and concludes, “the political predecessors of Hitler nurtured an institution which paved the way for totalitarianism.”

Ellis’s account was later challenged by Frank C. Child, who was chairman of the economics department of the University of California, Davis, from 1963 to 1980. In his 1958 book The Theory and Practice of Exchange Control in Germany, Child complained that critics of the German policies “reflect prejudices based upon distaste for Nazi political, social, and idealogical [sic] tenets.” Moreover, Child wrote, the critics suffer from “an apparent preconception that free trade and free markets guarantee the best of all possible worlds and that any departure from free and impersonal markets, by definition, reduces the welfare of each and every nation. This is a demonstrably false proposition.”

As Holman Jenkins noted in the Wall Street Journal, Senator Schumer’s sally against Mr. Saverin comes amid the implementation of the U.S. Foreign Account Tax Compliance Act, which makes it harder for Americans to get money out of the country.

The left will already be furious about this column for its mention of Nazi Germany in the context of capital gains taxes. Let me conclude by getting the right angry, too, by invoking the Universal Declaration of Human Rights, a product of the United Nations. It says, “Everyone has the right to leave any country, including his own” and “No one shall be arbitrarily deprived of his property.” What meaning does a right to leave have if the government is going to help itself to 30 percent of the migrant’s property on the way out?

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • thirtyandseven||

    The speaker of the House, John Boehner, a Republican, told ABC News’ “This Week” program that Mr. Saverin’s exit from America was “outrageous” and that he would support Mr. Schumer’s legislation if it is necessary to prevent people from leaving America to avoid taxes.

    Goddamn totalitarians think they deserve the fruit of your labor by virtue of your having been born and breathing their air.

    Fuck you, John Boehner.

  • Alex||

    And it's all the worse since neither of those apply to Saverin.

  • MccallJulio5||

    as Frances implied I am dazzled that people able to profit $5138 in four weeks on the computer. have you seen this site..FaceBookJob.notlong.CoM

  • Pro Libertate||

    Saverin. Didn't I kill him in Mass Effect?

  • cw||

    Gamer Poop did some awesome trolling of ME3.

  • Eduard van Haalen||

    Isn't he a residence hall at that wizard's school?

  • MWG||

    What? You thought republicans were only against IMMigration?

  • Brutus||

    And fuck everyone who opens his caviar-hole to support this bullshit.

  • ||

    "The speaker of the House, John Boehner, a Republican, told ABC News’ “This Week” program that Mr. Saverin’s exit from America was “outrageous” and that he would support Mr. Schumer’s legislation if it is necessary to prevent people from leaving America to avoid taxes. "

    Unbelievable. If people are fleeing to avoid taxes then perhaps the taxes are too high. The vampires in the legislature know this very well, but they are counting on the politics of envy and of voters being too fuckwitted to realize it. Jesus what predatory, sociopathic cocksuckers they are.

  • ||

    I apologize, sincerely, to any cocksuckers out there that I have offended. Cocksucking, when done right, is a noble task. No cocksucker should ever be compared to such vile vermin as those that populate the legislature.

  • cw||

    Here here.

  • Juice||

    ack,

    it's hear! hear!

  • Ballz||

    Cork Soaker, actually

  • Voros McCracken||

    The iceholes are fargin bastages

  • Pi Guy||

    You've gotten to be like a daughter to me and I wanna share somethin' with ya: I go both ways.

  • perlhaqr||

    I've taken to using "cockbiters" instead, in order to avoid the implication that I think of "cock sucker" as a pejorative term.

  • Pro Libertate||

    People used to come here to avoid oppression, and it was extremely rare that nonwackos left. What's changed?

  • Raistlin||

    We have "progressed" since then.

  • Hyperion||

    Yes, and if we could only evolve like our fearless leader, then we would begin to love the idea of having even more of our money stolen so that corruptocrats can piss it down a rat hole.

  • TANSTaaFL||

    +1001

  • wareagle||

    what's changed? The arrogance of govt and its belief that any money you earn is not really yours; it belongs to mama govt and only by its benevolence do you get to keep any of it.

  • Father Jack||

    Feck all of these worthless gobshite scum. If I had a drink, I'd rip off Boner's head and shite down his neck. Drink! Arse! Girls!

  • ||

    The people who used to be sat on positioned themselves as the bunch who won both World Wars, as the Savyerz Of The Chillun, and so on.

  • Proprietist||

    You aren't playing the game right. The title should have been "You Know Who Else Wanted to Tax Wealthy Expatriates?"

  • Jtsulli||

    Boehner needs to go. Hopefully he gets knocked out in the primaries in the near future. Along with the rest of the establishment, big government RINOs.

  • ||

    That would be almost every one of them so good luck with that.

  • Jtsulli||

    sad but true.

  • Trespassers W||

    There is no such thing as a big government RINO.

    To believe in the existence of such a thing is to demonstrate an embarrassing lack of familiarity with the Republican party.

  • Sharon Stone||

    Not until he dies or retires. His district is full on Team Red retarded. They will vote for him as long as there is an (R) next to his name.

  • B.P.||

    California was contemplating an exit tax a few years ago, too.

  • Brandon||

    When California did it, it was unconstitutional. Then came Obama.

  • ||

    In all fairness, the taxing authority of the state vs federal government is not really directly comparable.

  • Emmerson Biggins||

    You are right. The federal government has more guns, and they travel farther and faster.

  • Wilt Chamberlain||

    Heroes Earnings Assistance and Relief Tax Act of 2008
    Ugh, I think I just felt sick a little reading that law title. Seriously is there anything worse than names of laws? (Besides the laws itself, of course.) Why couldn't they just call "Military Earnings Assistance?" Or even "Soldier's Earnings." Using the word hero in a legal context is nothing but a blatant appeal to emotion, similar to the USA PATRIOT and DREAM Acts. Unrelated, but teh trend of news media saying "wounded warriors" bothered me a little. Maybe one organization can get away with it, but it's everywhere now. When did we bring back the term warrior? When I hear the word warrior I think of some barbarian tribal with swords, I don't think of a soldier.

  • Geoff Nathan||

    And this piece of excrement is called the exPATRIATE Act. (Enemy Expatriation Act).

  • ||

    They discovered Branding!

  • JoshSN||

    Actually, the original legislation dates back to 1966.

    Canada has such a law, too.

  • ||

    Hey, remember that time when everybody laughed at Ron Paul for saying he was more concerned about walls that keep Americans in than walls for keeping foreigners out?

  • tarran||

    My family had to smuggle their savings out of Turkey when we emigrated. I wasn't laughing.

    There is nothing special about America that would prevent them from trying the totalitarian shit that history is rife with examples of.

  • Geoff Nathan||

    And my lefty friends are outraged that someone would Godwin this.

  • Malto Dextrin||

    Lefties are always outraged.

  • perlhaqr||

    It's not really Godwin when you point out something the Nazis actually did.

  • np||

    Aside from expats already having to deal with an exit tax (based on current asset values), which is a form of double taxation, what's utterly crazy is that this proposed 30% tax is on future capital gains! This should send red flags to any journalist or anyone inquiring about it, yet I've only seen one place actually report this little detail, and no one actually ask how they are going to determine that.

  • wareagle||

    the only red flags journos ever see fly when any elected official suggests that people keep more of what they earn.

  • LemonMender||

    How would we know? I don't recall anyone suggesting that in recent memory except as an obvious little lie.

  • LemonMender||

    Err, I don't recall *any politician* suggesting that…

  • ||

    Those who deny to the gills that FedGov is a de facto Empire should be asked, "and how does the U.S. government plan to enforce it?"

  • LTC John||

    Why, by sending a gunboat and some Marines to take the Customs House in Singapore! Then we shall get ours back... How else, my good fellow?

  • JoshSN||

    I'm not defending the expatriation tax here, but, if it exists, then surely someone who opts out of citizenship before an expected financial windfall is possibly doing so only to dodge the tax.

    It's not like these billions of dollars are a complete surprise.

    A corporation can't disband after accidentally dumping a ton of toxics in a river and simply claim "We no longer exist, can't come after us."

  • Amakudari||

    Actually, given Facebook's crappy IPO, there was no financial windfall AFAICT. So the word "expected" shouldn't be thrown around here.

  • JoshSN||

    When he expatriated, there was:

    http://online.wsj.com/article/.....00234.html

  • Amakudari||

    My point is that an IPO is not an expected windfall. Most aren't, including this one, and the information that Facebook would go public was already known to all investors. It was fully priced in. Saverin then had to pay tax on to-date capital gains as though he had sold all stock at relinquishment of his citizenship. IIRC around that time FB's market cap was $90 billion, and now it's around $70 billion.

    IOW that $67 million people keep batting around rests on the assumption that FB's market cap went to $110 billion post IPO, at which point Saverin sold his shares, benefiting from Singapore's lack of a capital gains tax. That's clearly ridiculous. What's more likely is that he has a net loss versus the new basis and the US has gained money. Furthermore, he couldn't have known where the IPO would price back in September.

    I just don't get the argument. If the IRS wants to impose stricter rules for valuation of private holdings, sure, that's fine, fix it. But the expected capital gains people are talking about not only failed to materialize but were based on information unavailable to Saverin: the high end of the IPO range months later.

    (Also, I'm sure you'll agree the idea that he's defrauding Uncle Sam by living in a sovereign nation with a less confiscatory tax regime is creepy as hell.)

  • JoshSN||

    You got it! You don't know you do, though.

    "at which point Saverin sold his shares, benefiting from Singapore's lack of a capital gains tax."

    Clearly dodging his tax liability is what you said he did, and what he did.

  • Amakudari||

    No. No, because that's not what happened. That was hypothetical, as I clearly stated, and the point was that successfully "dodging" his tax liability depended on a successful FB remaining around the high end of its IPO range.

    He crystallized his capital gains in September. In case you've noticed, Facebook's market cap isn't $110 billion now but half that. If he had waited to relinquish citizenship until now, he would have saved even more because FB is valued less than it was in September.

  • CE||

    ...surely someone who opts out of citizenship before an expected financial windfall is possibly doing so only to dodge the tax....

    A corporation can't disband after accidentally dumping a ton of toxics in a river and simply claim "We no longer exist, can't come after us."

    Nice try, but comparing an organization attempting to dodge an actual liability for property damage to a prospective victim legally avoiding a hoped-for source of revenue to an overreaching government won't work here.

  • perlhaqr||

    I'm not defending the expatriation tax here, but, if it exists, then surely someone who opts out of citizenship before an expected financial windfall is possibly doing so only to dodge the tax.

    And so what? Fuck you, you fucking little fuck. It's his goddamn money. Good for him trying to keep more of it. Screw you motherfucking statist shitweasels and your cockbiting presumption that you have a right to lay claim to another person's property. I hope you all get stomach cancer and die in agony.

  • Proprietist||

    Someday when I have enough saved up I might also renounce citizenship to become a permanent traveller and live essentially free of taxation. I'm tired of paying these creeps out of my hard earned money.

    This law will be impossible to enforce against Saverin and won't stand up in court. It's retroactive, for one. It sounds like a bill of attainder, two. Still. Constitution schmonstitution.

  • Proprietist||

    "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."

    http://www.reuters.com/article.....6320120520

    I have to remember to renounce my citizenship before I'm worth $2 million.

  • hk||

    Very well said, Socialists are annoying. There's nothing wrong with leaving the country if you think taxes are too damn high.

  • Marshall Gill||

    I have often argued that residence or citizenship is a matter of free association. If you don't like the laws you can leave the country. Like many things, I was apparently wrong.

  • Whahappan?||

    Also, how many times have douchebags said "Oh if you don't like it, just leave!!"
    (P.S. give us all your shit before you do.)

  • Mickey Rat||

    They'll allow you to leave, just not with your property.

  • CE||

    Isn't it difficult to become a permanent traveler without a passport from some national government? Unless you mean permanent gamboler.

  • Sevo||

    Declare the pennies on your eyes.

  • sticks||

    Why did Paul not vote on this? I'd think this would be an easy NO.

    http://clerk.house.gov/evs/2008/roll331.xml

    I'm also pretty unaware of why anyone doesn't vote in Congress so...

  • Proprietist||

    I bet he was out campaigning in May 2008.

  • sticks||

    That would make sense.

  • Ballz||

    Cork Soaker, actually

  • C. S. P. Schofield||

    Seeing that a certain Austrian corporal was, by his own declaration, a Socialist, I imagine there are a LOT of parallels between modern legislation and his policies.

    For example, we know he was an anti-vivisectionist ... at least regarding animals.

  • JoshSN||

    And he never touched drugs or alcohol, like Penn Jillette???

    However, as a side note, I wish that socialist trope would simply die.

    Do you deny that there was a left (Communist-leaning) in most countries in Europe in 1939? Do you dent that there was a right wing in those same countries, that was anti-Socialist?

    Well, in point of fact, in every country Hitler went to, the right-wing were his allies. Petain, head of Vichy, was a French right-winger. Lefties made up the lion's share of the partisan rebels.

  • Emmerson Biggins||

    I don't give a fuck about the labels "right" and "left". National Socialists were however actual Socialists. And no, they didn't get along with the Communists. They were two political parties trying to take over a country. That doesn't mean they weren't socialists.

  • JoshSN||

    So, in Europe, in 1939-1941, every single right wing party was "socialist?"

    You really need a history lesson. Since you know labels don't matter that much, why do you accept Hitler's self-labeling as a Socialist? Do you accept that the DPRK is a Democratic, People's Republic (of Korea?)

    Here is a lesson for you, about Marshall Petain, Hitler's collaborator in France and the head of the Vichy government.

    http://www.fsmitha.com/h2/ch21b5a.htm

    He was anti-socialist, just like most right-wingers in Europe of the day.

    "Pétain maintained friendly and cooperative relations with the Germans, believing it was in the best interest of France. The anti-socialism and communism expressed as 'Better Hitler than Blum' was still alive among the middle class."

  • tag||

    My german is a little rusty, but in addition to the usage of Reich to mean "empire" it is also the word for wealthy (e.g rich) So i think a better translation is the "wealthy flight tax"

  • Ted S.||

    Reich as an adjective, does mean wealthy/rich, but I believe the term for "the wealthy" as in a group of people would be die Reiche, with the term for a flight tax for the wealthy being something like Reichensfluchtsteuer.

  • vonnyc||

    That is rich!!!

    I had forgotten all about the Reichsfluchtsteuer.

    A perfect comparison. So true it hurts.

    LMAO

  • JoshSN||

    Except the Germans were only applying it to Jews.

    That's a difference, don't you think?

  • Bryan C||

    Are you arguing that it was a good law but unfairly applied?

  • Amakudari||

    No, they absolutely weren't. It was a tax on all wealthy emigrants, although the definition "wealthy" was eventually lowered to encompass fleeing Jews.

  • ||

    "it is worth remarking that the National Socialists inherited it from Social Democrat supported coalition governments after nearly two years of elaboration."

    Oh, joy. Just think what full-blown fascists would inherit from the likes of Schumer et. al. I wonder how long it will be before kids get nightmares from watching "The Tholian Web."

  • Torontonian||

    "The legislation covers the last 10 years."

    Sounds like an ex post facto law to me.

  • CE||

    And a bill of attainder, if they're writing it to go after Saverin's dough.

  • A Mathematician||

    The law that imposed the exit tax Mr. Saverin was trying to avoid, the Heroes Earnings Assistance and Relief Tax Act of 2008, was signed into law by a Republican president, George W. Bush, after being passed in the Senate by unanimous consent and in the House by a vote of 403 to 0.

    Where was Ron Paul that day?

  • Malto Dextrin||

    He was probably out trying to teach some mathematicians economics. Truly a sisyphean task.

  • Brutus||

    Anyone remember what the fourth major condition of a Marxist state, as defined in the Communist Manifesto?

  • Jake Collin||

    Looking at all ten, if this is passed, the US will have implemented all or parts of five (2, 4, 5, 8, 10), tried to implement all or parts of two more (2, 6), and I'm not even sure about 1 because technically we can own private property but I'm not sure your really "own" anything if the government can confiscated if you don't pay them tribute.

    That doesn't even count the fact that the US has 25% of the world's prison population thanks to the War on Drugs.

    And people are wondering why some want to leave?

    http://en.wikipedia.org/wiki/T.....Communists

  • JoshSN||

    I'm chucking at you if you think we have a "heavy progressive" income tax.

    http://ctj.org/pdf/taxday2011.pdf

  • ||

    Half the tax filers pay no federal income tax, while the top 1% pays 37% of federal income taxes on 17% of all income.

    Not heavily progressive enough?

  • Virginian||

    Of course not. If the rich were paying their fair share, they wouldn't still be rich.

    Then, a decade later or so, the commisar is redistributing the chickens so that the kulaks don't wreck our glorious new State.

    Sic Transit Gloria Mundi.

  • JoshSN||

    And as long as you ignore the payroll tax (which is now equal, in total, to the income tax) and all the state and local taxes, you might be right!

    But you aren't.

  • Chili Dogg||

    But JoshSN, you were talking about income tax not being progressive at first. Then, when neoteny busted you with the signficant percentage of federal income tax that the top 1% pay, you suddenly started talking about the payroll tax, and all the state and local taxes.

    When you are shown to be wrong, you change the parameters: "Oh, I meant all taxes, not what I really said at first!"

    Can you man up enough to admit that YOUR original claim about income tax progressivity is wrong?

    BTW, the numbers in your linked site look funny. Please check the IRS numbers about the percentage of taxes paid by quintile.

  • sweeterjan||

    What meaning does a right http://www.ceinturesfr.com/ to leave have if the government is going to help itself to 30 percent of the migrant’s property on the way out?

  • Amakudari||

    Again, the US is already considerably worse than every developed country here.

    If you work abroad, live abroad, receive income in a foreign currency, render only services abroad, consume no US services, etc. you still owe taxes just for being an American. I file in two countries—hell, I even have to declare all of my bank accounts—just for the privilege of US citizenship. Unlike other countries, the US already has a noose and has only to tighten it.

    And, of course, once the communist/Nazi emulators in Congress realized the boot on the neck of expats was coming a boot loose, they move to bar all reentry to the US and impose a tax on the future earnings of a wealthy Jew leaving the country.

    Honestly, I can't think of a single thing that could happen to Chuck Schumer that would cause me to feel remorse for him. What a fucking scumbag.

  • Mickey Rat||

    "What meaning does a right to leave have if the government is going to help itself to 30 percent of the migrant’s property on the way out?"

    The "rights" in that document never had any meaning to begin with, as demonstrated by the caveats at the end:

    "Article 29.
    • (1) Everyone has duties to the community in which alone the free and full development of his personality is possible.
    • (2) In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and the general welfare in a democratic society.
    • (3) These rights and freedoms may in no case be exercised contrary to the purposes and principles of the United Nations."

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  • Combaticus||

    Illegals don't seem to have any trouble sending money out of the country.

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  • CE||

    Theoretically, accounts like this could be quickly purged, given that registration is now required on this site?

  • joy||

    The Reichsfluchsteuer was originally imposed not by the Nazis, but, rather, on December 8, 1931, by the pre-Hitler, centrist government of Heinrich Brüning, http://www.nikewinkel.com/scho.....-c-46.html who had a doctoral degree in economics.

  • granite state destroyer||

    No, Saverin is clearly stealing US property. Until someone changes the tax law, the taxes due are the rightful property of the government. Saverin is the thief here. Presumably he knew what the tax law was when he began his business career. If he didn't want Uncle Sam to have a piece he should have left the US earlier, or fought honestly and above board to change the law. As much as I dislike grandstanding politicans, I have very little sympathy for Saverin.

  • Chili Dogg||

    "Stealing US property"? granite, you are saying that someone who tries to keep more of what he or she earned is a "thief".

    Personally, I don't blame someone for trying to avoid high tax rates. I blame the government for running off productive individuals.

  • joy||

    I think Schumer can probably find the legislation to do this. It existed in Germany in the 1930s and Rhodesia in the ’70s and in South Africa as well,” http://www.petwinkel.com/pet-polo-c-38.html Mr. Norquist said. “He probably just plagiarized it and translated it from the original German."

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