Prologue – November 2014:
Boris @MayorOfLondon Johnson interviewed on Diane Rehm show about his U.S. capital gains tax bill http://t.co/JPqoHzb05H
— U.S. Citizen Abroad (@USCitizenAbroad) January 23, 2015
Boris Bows – January 2015:
London mayor bows to ‘outrageous’ demand to pay US tax bill – http://t.co/MuJY3rV3Ka http://t.co/ylcQPe8RJN via @FT
— U.S. Citizen Abroad (@USCitizenAbroad) January 22, 2015
The article from the Financial Times includes:
Mr Johnson has previously said he wanted to renounce his American citizenship but that it was “very difficult to give up”.
The clearance of his debt to the US government should remove the major obstacle to him renouncing his American passport, but his spokesman refused to comment on whether he would now do it.
Mr Johnson’s decision to pay up was taken grudgingly but will ensure that his visit to the US — intended to drum up investment for London — is not dogged by questions about his tax affairs.
All US citizens, including those with dual citizenship, are legally obliged to file a tax return and pay US taxes wherever they are living. Capital gains tax on the sale of a primary residence is not applied by UK tax authorities, but is levied in the US.
Mr Johnson’s troubled relationship with the land of his birth emerged last November on a tour of the US to promote his new biography of Winston Churchill, when he revealed he had been hit with a demand for capital gains tax.
Asked whether he would pay it, he said: “No is the answer. I think it’s absolutely outrageous. Why should I? I haven’t lived in the United States since I was five-years-old. I pay my taxes in full in the United Kingdom, where I live and work.”
London Mayor Boris Johnson is the author of – The Churchill Factor – a book about Winston Churchill. While on tour in America, Mr. Johnson announced that he would NOT pay a U.S. tax bill on the sale of his London residence. This announcement was particularly newsworthy. After all, the plight of Boris Johnson is the same as the plight of any “U.S. born person” who has tried to live outside the United States. They will learn that the U.S. regards them as “property” and not as “persons”. Those born in the U.S. do NOT have rights as human brings, but have only such rights as the U.S. allows.
Boris has bowed. He has acknowledged U.S. jurisdiction over him.
What does this mean for Boris? What does this mean for the U.K.? What does this mean for the world?
The end of the beginning …
I am reminded of an oft quoted remark by Winston Churchill:
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
The article generated a number of comments of interest, including:
Well done Boris. You are a great model for other politicians to follow. Great to see that he has put the interests of his adopted country ahead of his own selfish interests. May he go far?
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I was so hopeful Mr. Johnson would have had the courage to stand up to this bullying and protect assets that belong in the UK. He was the poster child for the hypocrisy being a UK citizen placed against the backdrop of the American Revolution. The scene I wrote had him dumping Starbucks coffee in the Thames! Guess the 7.6 million US deemed tax slaves living abroad must look for another hero.
Such a shame, he was perfect and I actually thought he had the guts to do it.
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The US scheme (in both the US and UK senses of the word) taxes not only US citizens resident in other countries but also the countries in which they reside. Why these countries put up with this virtually unique transfer of their national incomes to the US is beyond me. They should pass laws forbidding the payment of such taxes.
Boris is NOT only the latest casualty, he is the greatest casualty …
Boris Johnson is the latest casualty of those with the bad luck to have been “Born In The U.S.”
The “Boris Johnson Chronicles” have provided:
– low grade entertainment (I am sure that there are plenty of “envy specialists” in around the world who believed that Boris should be punished “just because”)
– hope for those 7.6 million persons attempting to live their lives outside the U.S., with diminished value based on their “IRS Discount” and subject to “IRS Persecution”
– pain for Boris Johnson and his family (I feel particularly sorry for the family – don’t marry a U.S. citizen!)
– publicity for the U.S. policies of attempting to levy taxes on the residents of other countries
AND ESPECIALLY
– confirmation of the obvious fact that the U.S. believes it has ownership over anyone born in it’s borders.
The clear lesson and message for all “U.S. Born” people …
Boris Johnson has “bowed” to President Obama, the U.S. Congress and the IRS. He has bowed deeply, respectfully and humbly. He has publicly agreed that he is subject to U.S. control wherever he may live in the world. He has assisted the President Obama in transferring “after tax” British capital to the U.S. Treasury. Mr. Johnson’s decision must be respected.
After all Boris Johnson never chose where he was born.
That said, Boris Johnson has agreed to become a conduit to facilitate the transfer of U.K. capital to the U.S. Boris has “set an example”for all U.S. born people. He has confirmed that their obligations to their “Birthland” are primary, permanent, and should receive priority.
The message is clear: If even Boris bowed, what hope is there for me?
It’s the end of the beginning. What should this mean for Boris and his future? What’s the next step?
I certainly understand WHY Boris agreed to pay his “tribute”. Yet, Boris Johnson is one of the few people with the resources and moral capital to fight the immorality of U.S. tax policies. But, he didn’t. If Boris didn’t, how could anyone else?
But, let’s not forget that:
Likes the quote: "To those whom much is given, much is expected." http://t.co/toSOJ35HDv via @goodreads
— U.S. Citizen Abroad (@USCitizenAbroad) January 22, 2015
Boris Johnson is the Mayor of London. He is a U.K. politician. It’s reasonable that he be held to a reasonable standard of behavior. Boris Johnson simply cannot be in a position where his is required to obey the laws of a foreign power. Boris has bowed. He has acknowledged his helplessness and his servitude. He has confirmed that he will both:
– accept that the U.S. has jurisdiction over him; and
– comply with whatever U.S. demands of him.
The conclusion for Boris Johnson is that …
Boris Johnson must resign his position as Mayor of London. He simply cannot both be the Mayor of London and the loyal and humble servant of the United States of America. One cannot both be the “Mayor of London” and assist in the transfer of U.K. capital to the U.S. Treasury. It’s a sad thing. But, the conclusion is inescapable.
Salvation lies only in renunciation of U.S. citizenship …
Boris must publicly announce his intention to renounce U.S. citizenship. He must then follow through in a public way. His obligations to the people of Britain demand nothing less. Only after he has renounced, will he be able to proudly say:
The name’s Johnson, Boris Johnson.
Without a CLN, he is nothing but U.S. property. It is not possible for him to serve in British Public Service.
The broader conclusion is that …
No Governments can allow “U.S. Born” people to run for or serve in public office. To do so is to cede the sovereignty of the nation to the United States of America.
The broader implications of a “U.S. place of birth” need to be considered by all governments.
@Marie,
Just to be sure I am clear, the 2 million is a reference to an aggregate of assets including things like pension being projected as paid out, any stocks, etc. Not just the value of the house. And all this in reference to renouncing only.
If you are not renouncing and you sell the house, you will be liable for the entire gain less the $250k exemption (and of course you would get to take off anything regarding renos, etc).
@George, The exclusion is $250,000.
@Polly, The rule is that a dual citizen at birth who is living in the other country of citizenship at the time of renunciation, and has not lived in the US for at least 10 years in the previous 15 years, is not considered a “covered expatriate” and therefore not subject to the expatriation tax. But the person is still required to be “tax compliant” in the last 5 years. And this is only available for dual citizens at birth, so immigrants who naturalize in the US and then later return to their countries of origin or people born with only US citizenship who later naturalize in another country are not included, even if they lived in the US for only a short period, or never. It is also not available if the person is living in a third country, which is common in Europe. This exception was not well designed.
@shadowraider: interesting clarificaion. In the EU there is a tendency to consider that rights in one country are equal to rights in another for an EU citizen. I imagine the case where the IRS wants to exercice the exit tax because a dual French-US at birth is now living in Spain, not France. To the US that is not an exception to the exit tax. Imagine that the citizen doesn’t want to pay and that the IRS proceeds legally against them (say Spain has collection agreements with the IRS, I don’t know if that’s the case). That citizen could then argue that there is no reason to differentiate between 2 EU countries, France and Spain, where he has the right to live. The matter would have to be taken up by local courts and one could imagine that they would rule in favour of that EU citizen.
@maz57. Thomas Mulcair and Stephan Dion both have dual Canadisn and French citizenship. Both have been leaders of Opposition parties and have strived to be Prime Minister.
Harper challenged both if them in their dual status but neither of them renounced U.S. Citizenship.
Ted Hsu, the Liberall MP who stood up for us, was born in the US and immigrated to Canada with his Chinese parents when he was an infant. So, there does not seem to be anything in Canadian law that prevents a dual national from holding elected office without renouncing other citizenship.
Likewise, Americans can be elected even if they have citizenship of another country. Ted Cruz was “technically” a Canadian citizen when he was elected to the Senate even though he did not know it until a Texas newspaper brought that pesky problem to his attention. If only the US would make it as easy (one form, one stamp, $100 and you’re out) for us as it was for Ted.
I agree Boris should renounce if he wants to be PM of Britain. I do not know if he is required to do that under UK laws.
Boris May have paid a pittance or a lot to appease the IRS monster. He did what he had to do to protect himself, his family and his future. It is a huge disappointment he did not follow the lead of his hero, Winston Churchill: “Never, never, never give up.”
Whatever Boris Johnson decides to do or not to do about his US citizenship, I am complete agreement with the statement about resignation. While I recognize and accept that there are reasons, whether by birth or by choice, why some people want or feel compelled to maintain dual (or multiple) citizenships, I strongly feel that such persons have no place in either country’s legislative bodies, public services, police and military forces, or judiciaries (at any level of government), because how can or should citizens and taxpayers of either country trust those person’s loyalties, motivations and behaviours in performing duties in those functions? Where is the ultimate loyalty and allegiance (which I think all citizens and taxpayers of a country have a right to expect and demand of their public employees and officials) in the case of a conflict of interest between the two citizenships? And I generally would extend that statement to include people like Johnson who were born duals and never have lived in the other country as adults. I most certainly would extend that statement to anyone who has acquired citizenship by voluntary naturalization as an adult yet retained dual citizenship.
I find it interesting that both the Canadian and US citizenship and immigration websites, while recognizing that dual citizenship exists, state it can complicate things for people, and the wording implies they don’t encourage dual citizenship. The US actively still discourages dual citizenship, as did Canada until 1973, by inserting into the beginning of the oath of citizenship for US naturalization a renunciation of all previous foreign allegiance and nationality (google the current US oath of citizenship and read it!). I’ve never understood nor agreed with Canada’s decision to drop its parallel requirement in 1973.
@Maria and tricia and everybody,
Yes 2 million total assets is the limit to avoid exit tax. But that is US dollars. Canadian buck is down dramatically, now 80 cents/USD. So its 2.5 million Canadian dollars. On the flip side, renouncing is now almost 3000 $CAN (=2350 USD). BTW I think Boris got some kind of deal from the IRS.
I wonder if he got a deal allowing him to relinquish instead of renounce, which would protect him from potentially being barred from visiting the US to promote his book or raise money for London.
Brave Boris had my admiration for awhile but I’ll just have to sweep him aside, now that he is Caved Boris. I noticed he really only showed concern about his own unfortunate position. It was only outrageous for HIM to pay, no word about others. So obviously he did what he thought he had to do for himself and his family but truthfully I think the IRS cut him a deal so they could tick off another “Under Control” box. Whether he renounces or not and whether he resigns or not, it will not matter to me. That’s something UK voters will have to take into consideration. The true heroes are Ginny, Gwen and the ADCS team. That’s where I will keep my focus. If Boris eventually speaks up about the injustice of US tax tyranny and IRS overreach (he’s in “no comment” mode at present) then I might give him a glance but basically he’s off my radar for now.
Yes Calgary and Shadow – Boris will not have to pay an exit tax.
Fred summed up the big picture all too well. Nobody is more enslaved than those who falsely believe they are free. Non-resident Americans are waking up to the fact that they are indeed not free. More and more are taking action and breaking the shackles that are enslaving them.
Fred so eloquently wrote:
“People are awakening, as I am, to the notion that US citizenship is a burden (or even a curse) for those who don’t live there. Boris Johnson’s fate is important in publicizing this.”
“People will from now on (savvy people already have) progressively distance themselves from dealings with the US. Hearts and minds are being lost, as are business connections. And the “milking” of US citizens abroad will slowly yield less and less as those who are burned reorganize. I think many other Boris Johnsons have taken full notice, and will prepare to free themselves. In 10 years the US will be left with powerful financial laws that will apply to fewer and fewer people.”
will a FOIA (or UK equivalent) help unravel the truth?
@kermitizi @foo I am virtually certain Boris got “some kind of deal.” In fact, we don’t know that he actually paid anything,
Despite screaming headlines, his spokesperson will only say:
I wonder if it was “dealt with” the way Penny Pritzker was “dealt with.” The day after she revealed a “clerical error” had caused her to not report $80 million in income, Pritzker was appointed U.S. Secretary of Commerce.
@Hv: I don`t think it would be an FOI in the UK but rather to the IRS. Then, they would not likely be able to release the information because it is private information of an individual.
I would still like to see Boris in the FATCA fight–but I don`t think it is likely to happen now. I suspect lawyers and accountants have told him to shut up.
I’m not giving up on Boris yet, although I admit I was very disappointed to hear the news about the settling of his tax bill. That would be a necessary part of the process of ridding himself of the scourge cleanly and forever. I would imagine the IRS was in a deal-making mood because this case was shining a very unflattering light on the stupidity of US and it’s CBT.
I waiting to hear that he went to the Consulate and renounced, or better yet, to see his name published in the Federal Register. It’ll take a while.
@triciamoon Boris will have a valid relinquishing act this may when he is elected mp
@shadow the figures I gave were all in Uk sterling not us dollars
Strange comment.
Nobody thought of raising an objeccion when he obtained a US passport a few years ago, and with it the advantages it confers.
Now, some are revolted because he is acquitting himself of the obligations associated to that passport. Sorry, but this is illogical.
Here in America Central we have many elected leaders who were born in the United States, and often were there educated too.
Honestly nobody cares that they pay American taxes. People care about having competent, honest and well educated leaders, not where they may pay taxes in addicion to their home country.
Last I heard, unlike healthcare professional, politicians have no ‘standards of practice’ or ‘code of ethics’.
We have had many discussions here at Brock in the past, whether one is morally obligated to rebel against an ‘immoral law’, or ‘sauve quie peut’ as USXCanada repeatedly suggests. Some Brockers (and you know who you are) have even said that they felt that complying with US tax laws was ‘the right thing to do’ because it is the law.
In the ideal world, Boris would put others before himself, and realize the opportunity he has to be a leader for all those average people doing their best to defy unjust legislation, but in the real world, the one that politicians and most of us live in, this almost NEVER happens.
If we are going to criticize Boris, and suggest he resign, we may as well suggest the same for almost all elected government representatives. Sadly, it is the rare political leader, that rises above the rest, and actually has the ethical IQ that we are demanding of Boris or that Canadians demanded of the deceased finance minister James Flaherty who also let us down.
Sauve quie peut.
@Friend_Guate – Actually people all over the world DO object to their Leaders holding US Citizenship, paying Taxes to the US and owing obligations to the US under the Reed Amendment, Logan Act …. as quoted elsewhere on this blog:
“18 USC § 953. Private correspondence with foreign governments
Any citizen of the United States, wherever he may be, who, without authority of the United States, directly or indirectly commences or carries on any correspondence or intercourse with any foreign government or any officer or agent thereof, with intent to influence the measures or conduct of any foreign government or of any officer or agent thereof, in relation to any disputes or controversies with the United States, or to defeat the measures of the United States, shall be fined under this title or imprisoned not more than three years, or both.
This section shall not abridge the right of a citizen to apply himself, or his agent, to any foreign government, or the agents thereof, for redress of any injury which he may have sustained from such government or any of its agents or subjects.”
People around the world do NOT want to be subordinate to the US. Many (maybe even most) wish to be friends and allies of the US but not in a state of servitude to the US and certainly not having the US extract taxes from their economies.
I wonder if Boris has signing authority over any city accounts. If so then wouldn’t he have to report that to the IRS?
hdxich precisely. How do we ask that question where it counts? I.E. in Englnd
@George
perhaps but the advantage of having a relinquishing act is already lost to him so it really doesn’t matter
Boris Johnson of London is not the only prominent person who owes the Obama money sweeping machine. The King of Thailand is a natural born American. The sons of the deposed Egyptian president were born here. Many prominent Saudi’s (prince’s no less) were born in U.S. hospitals and sent home soon after without the slightest notion they would owe millions to the U.S. Treasury, from the oil money they sweep up from the world. The list goes on and on.
This is why I want us to stop the nonsense and adopt the FairTax, a National Sales Tax that our poor would not have to pay but our real criminals would. Maybe they are afraid to pass the FairTax because they are Politicians and criminals.
@DUKE, Why don’t you tell us?
How can Boris aspire to become PM if he continues to hold US citizenship. The UK can’t have a leader with divided loyalties.
@Wilten Tidwell. Excellent points sir. I had completely forgotten about the king of Thailand and the others you had mentioned. That said, it does make one wonder if there isn’t perhaps special exemptions set up for “US persons” in much higher positions than the mayor of London, and that IRS agents just the memo to “not bother” with cases that could cause any diplomatic embarrassment.
And speaking of the mayor of London; would it be possible that he was pressured by not only the Prime Minister but also banks to reconsider his position and give in? Remember, it is the banks and not sovereign, foreign governments that, by all evidence in this FATCA issue, appear to be running the show.
Just throwing out a few thoughts here but what we have now, with CBT and FATCA, is, for all practical purposes, a sort of imposed legal anarchy on all countries which signed an IGA with the US. Examples abound, especially in Canada, of not just due process violations but even various national constitutions being stood upon their respective heads in the effort to comply with naked, international extortion.
Yes the US government used CBT as an excuse to begin the FATCA crusade but I refuse to believe that the treasury department was so naive as to believe that by clamping down on “US persons” abroad that they would really reap enough tax revenues to actually put a dent in the national debt. They say that there are appoximately seven plus million US expats. If the treasury department could actually herd all these cats together and calculate average income, it is doubtful that it would be more than 80k. That figure puts nearly all under the exemption figure, thus making the whole business pointless in the first place.
So then why is it that the US pushed FATCA IGA’s on over one hundred sovereign countries then? Would it be far-fetched to believe that the Federal Reserve is setting the groundwork for something even more ominous in the years to come?
Yes the US government has become a despicable bully and deserves to be relentlessly confronted on all levels, but it is merely doing the bidding of the Fed…not that that is any excuse.
Perhaps the ugliest and most depressing aspect all this is the abject cowardice of the world in the face of blackmail. Signing an IGA may disguise coercion, converting it into something to present to the people that appears to be noble and necessary, but in the end it was naked fear that brought men to the IGA negotiating table with America, and that’s a devastatingly shameful motivation.
@ExpatEric
Yes – to keep the dollar the dominant world currency.