London Mayor Boris Johnson Hates the IRS, Too
By David A. Graham, Feb 17 2015
The dual citizen says he's renouncing his birthright after getting a fat tax bill from Uncle Sam.
What's more American than Boris Johnson? Brash, self-confident, charismatic, profane, ambitious and upwardly mobile but skeptical of authority, the mayor of London (who was born in New York City) seems like he'd fit right in on this side of the Atlantic.
But Johnson is forsaking the land of his birth—and in particularly spiteful fashion—announcing he intends to renounce his American citizenship after wrapping a tour of the United States, during which he boosted the Boston Olympic bid, met with leaders in Washington, and was reportedly mistaken for Donald Trump in New York.
Johnson's British parents were living in New York City when he was born, making him an American citizen. That has cost him. In November, Johnson was blustering (as he is wont to do) about the U.S. government trying to hit him with a massive tax bill. Johnson sold a house in London for a cool £730,000 profit, and as U.S. citizens are required to pay capital-gains tax on overseas transactions, Uncle Sam sent Mayor Boris a bill. The amount is unknown—aides insisted a £100,000 estimate was overly high (the IRS cannot legally comment on individual cases), but Johnson said he wouldn't pay: “No, is the answer. I think, it's absolutely outrageous. Why should I? I think, you know, I'm not a—I, you know, I haven't lived in the United States for, you know, well, since I was five years old." Fittingly, the reason for Johnson's move is also quintessentially American: He hates the IRS.
Something changed between then and now, because Johnson's camp says he's settled the bill. Even for the staunchest advocate of confiscatory taxes, Johnson is a sympathetic case. He's clearly for all intents and purposes a Briton (despite joking with David Letterman a few years ago that, as a natural-born U.S. citizen, he could run for president), and comes to the current situation only because of the collision of two unusual features in American law: first, birthright citizenship, the granting of a passport to any baby born here; and second, the fact that the law requires Americans to pay taxes on all global income, which as The Wall Street Journal notes is not a universal practice.
Johnson isn't the only American citizen to find himself in such a bind—though his unusual circumstances and peculiar shock of hair set him apart. Many expats complain that they're unfairly penalized by conflicting systems that are hard to understand, leading them to underpay without intending to or else be forced to double-pay taxes. Since a 2010 law gave the IRS more info on Americans' bank accounts, ever greater numbers of Americans have been giving up their citizenship. The most high-profile case was Facebook co-founder Eduardo Saverin, but a record 3,415 people did so in 2014, according to Bloomberg, including a 37 percent leap in the final quarter of the year alone.
Since many of these people are high earners seeking to hold on to as much of their wealth as they can, they garner little sympathy stateside. Saverin was pilloried by politicians. For many of them, it may be a difficult decision between their homeland and their pocketbooks, with the pocketbooks winning out. That's less true for Johnson, with little direct connection to the U.S. But the law of renunciation might give some hint into his sudden acquiescence with the tax bill. To surrender citizenship, a person has to have been compliant with all tax laws, including interest and penalties, for five years. (Depending on his net worth, he could also be subject to an exit tax.)
One might be well-served to withhold final judgment on the whole matter until one has seen the signed papers. Johnson threatened to renounce his citizenship in 2006, too, enraged that he wasn't allowed to enter the U.S. on his British passport. U.S. officials told him that since in the eyes of U.S. law he was a citizen, he needed to show an American passport. He recounted it in a typically hilarious rant—
“As far as I can interpret the psychology of the rule, which has only been applied since 9/11, it is part of America’s new them-and-us mentality, the Manichaean division of the world into Americans and non-Americans, obliterating any category in between. Listen, buddy, the Americans seem to be saying. You got a right to be American? Then you do us the courtesy of travelling on the world’s number one passport when you come here. What you got to be ashamed of, boy?”
—but what he didn't do at the time was to actually go through the legal work of renunciation. Now, the fat tax bill has given him new reason to do so. The British press suggests he may have another reason for doing so, too: his longstanding desire to become prime minister. While there's no legal obstacle to becoming PM as a dual citizen, The Telegraph suggests he might want to pre-empt any suggestions of divided loyalty.
Still, it must be a bittersweet moment for the mayor. His decision comes not long after the publication of his biography of Winston Churchill, another irascible character whose journey to 10 Downing Street Johnson he would like to emulate. Such is Johnson's "unrestrained idolatry" that the Times Literary Supplement panned the book as a "jaunty, opinionated and ahistorical piece of hagiography."
Both men came from prominent families, and both were professional writers before entering politics. Both also had American connections: Churchill's mother was American, and had he been born after 1934, he would have been an American citizen, too. (Before then, American citizenship was handed down only from the father.) Instead, John F. Kennedy bestowed honorary U.S. citizenship on Churchill in 1963. It must be galling for Johnson to have to take the opposite tack, going out of his way to shed citizen status. Not as galling as that tax bill, though.
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