Dem senators introduce bill to punish Facebook co-founder Eduardo Saverin

Sen. Charles Schumer, D-N.Y., left, accompanied by Sen. Bob Casey, D-Pa., gestures during a news conference on Capitol Hill in Washington, Thursday, May 17, 2012, to unveil a comprehensive plan to respond to Facebook co-founder Eduardo Saverin's scheme to renounce his U.S. citizenship in order to dodge taxes on profits he is expected to collect when the social-networking company goes public.
AP Photo/Susan Walsh

Updated at 4:50 p.m. ET

(CBS News) Facebook co-founder Eduardo Saverin recently relinquished his U.S. citizenship just ahead of Facebook's massive initial public offering. But if Democratic Sen. Chuck Schumer has anything to do with it, as the senator said today, "Mr. Saverin's social network is about to get a lot smaller."

The 30-year-old entrepreneur, whose shares in Facebook are expected to be worth around $3 billion after the social network goes public on Friday, is now residing in Singapore. Conveniently, Singapore does not have capital gains taxes, so his move could save Saverin anywhere from $67 million to $100 million in U.S. taxes.

Presuming that Saverin moved to avoid paying taxes, Schumer and Democratic Sen. Bob Casey of Pennsylvania on Thursday unveiled legislation to stop what they called a "despicable trend."

Under their legislation, any American who renounces his or her citizenship for the purpose of avoiding taxes will be punished in two ways: They will be barred from re-entering the U.S., and their future investments in the U.S. will be taxed at a 30 percent rate.

Taking advantage of every Facebook one-liner available, Schumer said of Saverin, "Sen. Casey and I have a status update for him: Pay your taxes in full, or don't ever try to visit the U.S. again."

Saverin, who was born in Brazil, told the New York Times that his move had nothing to do with paying taxes.

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Schumer said Saverin's claim "rings hollow." The senator said it was "outrageous" that Saverin would renounce the country that "kept him safe, educated him, and helped him become a billionaire." He called Saverin's story "an American success story gone horribly wrong."

Current law says that a person who renounces his U.S. citizenship for the purpose of avoiding taxes can be barred from re-entering the country, as Talking Points Memo pointed out this week, but Schumer said there have been problems enforcing the law.

Under Schumer and Casey's bill, if an American with a net worth of $2 million or a tax liability of $148,000 renounces his or her citizenship, the IRS will presume that person is moving in order to avoid paying taxes. The person in question will be responsible for proving otherwise.

If a former citizen wants to return to the U.S., Schumer said, he could pay all the taxes he owes in order to return.

Saverin later released a statement, Bloomberg reports, saying his decision to expatriate "was based solely on my interest in working and living in Singapore, where I have been since 2009."

"I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government," he said.