On Friday, Bloomberg broke the news that early Facebook investor Eduardo Saverin had renounced his American citizenship just before the company's IPO in order to dodge a hefty tax bill. This caused a lot of hand-wringing and condemnation of Saverin. But the real reasons for Saverin's move may have to do with more than taxes: according to both Time and the Wall Street Journal, Saverin renounced his citizenship way back in September of last year, and now lives in Singapore, which doesn't levy a capital gains tax. His spokesman told the WSJ, "US citizens are severely restricted as to what they can invest in and where they can maintain accounts. Many foreign funds and banks won’t accept Americans. This was a financial rather than a tax motive." His spokesman also says Saverin plans to continue investing in tech companies both in the US and around the world. Taxes may not be Mr. Saverin's entire motivation, but with a $4 billion stake in Facebook, they certainly seem to be playing a crucial part: by leaving the US in September, Saverin only pays tax on the value of his stock at that time. If Facebook were to double in value over the next year and Saverin sells, he will save hundreds of millions of dollars.

If some other country had invented Facebook... it would have invented Facebook

Saverin's departure has become a flash point in a larger debate about taxes. "It’s a loss for the US to have many well-educated people who actually have a great deal of affection for America make that choice," Richard Weisman, head of the global tax practice at Baker & McKenzie in Hong Kong told Bloomberg. "The tax cost, complexity and the traps for the unwary are among the considerations." In the grand scheme of things, Saverin's exit from the US is small potatoes. In recent months there have been stories detailing how massive corporations like GE and Apple avoid billions in taxes with offshore accounting chicanery. Rich Americans — from New York City mayor Michael Bloomberg to Presidential candidate Mitt Romney to Facebook investor Peter Thiel — all do their best to keep their tax rate low. Thiel in particular is outspoken: he is of the opinion that America's high tax rates put us at a disadvantage to other nations around the world.

But one could argue Facebook is very much a product of America's well-regulated, well-taxed society. The internet is a product of government funded research at ARPANET, working closely in cooperation with public universities. There were other social networks that achieved massive scale before Mark Zuckerberg got into the game. Facebook built the largest and most successful social network by targeting the vibrant ecosystem of users at America's universities and high schools, a majority of which are publicly funded. Who funded Facebook itself? The money and experience came from Silicon Valley, a melting pot of public and private innovation, where the globe's top tech investors all (presumably) pay capital gains tax, in return for living in close proximity to the world's busiest startup hub and the ambitious 18-year-olds who might become the next Zuckerberg. If Thiel is right that America is at a disadvantage because of our high tax rate, why do so many important global internet companies continue to be founded and emerge from California and New York, two of the states with the highest effective tax rates?

Now, it may be that Saverin is indeed moving to Singapore simply to avoid taxes on Facebook's IPO, and that his statement is disingenuous. But taken at his word, the idea of moving to Singapore and renouncing his citizenship while trying to be a great early stage tech investor is the definition of penny wise and pound foolish. To take a line from The Social Network, if some other country had invented Facebook... it would have invented Facebook.