WASHINGTON – Boris Johnson has the unique ability to be ridiculous and charming at the same time. The London mayor and his inexplicable haircut can offend entire cities, get stuck on zip lines in front of crowds of journalists and be sacked from government for lying about an affair (“an inverted pyramid of piffle,” he claimed), yet still somehow end up one of Britain’s most important and beloved politicians. Many think he will be prime minister sooner or later.
However, Johnson’s charm may well fall flat with one organization: The Internal Revenue Service.
The mayor’s dispute with American tax-collectors was brought to light recently when he traveled to the United States and did a blitz of interviews with the American news media. While talking to WAMU’s Diane Rehm Show, Johnson explained that the U.S. government was forcing him to pay the capital gains tax on the sale of his Islington home. “Can you believe it?” he exclaimed. When asked by Rehm if he intended to pay the bill, he said that he would not. “I think it’s absolutely outrageous,” he added.
Johnson’s problem comes down to one important factor: His dual-citizenship. Despite being very, very British, Johnson was born in New York and lived in the United States until he was 5, hence becoming a natural born citizen. And despite some threats to renounce his citizenship (“After 42 happy years I am getting a divorce from America,” he wrote in 2006 after a spat with a U.S. immigration officer), he renewed his U.S. passport just two years ago.
It’s certainly tempting to dismiss Johnson’s dilemma as the simple case of a very rich man attempting to float the law (“Come on, Boris!,” the New York Times’s Roger Cohen wrote. “Give us a break.”) but there is a degree of sympathy to be found here: American citizenship carries with it a uniquely vexing taxation problem. The United States is one of only two countries where taxation is based on citizenship rather than residence (Eritrea is the other). If Johnson lived in the United States, for instance, he would not have to file a British tax return.
The unusual U.S. policy dates back to the Civil War and the Revenue Act of 1862, which called for the taxing of American citizens abroad, in part to punish men who fled the country to avoid joining the Union army.
In practice, this is usually often just an annoying bit of paperwork for foreigners – while the average citizen would have to file a tax return, it’s unlikely they’ll have to pay anything. However, it can become expensive for higher earners, especially when tax laws don’t line up. As Lisa Pollack, an American expat herself, explains for the Financial Times, this is what appears to have happened for poor old Boris:
“Johnson’s U.S. tax bill for the sale of his home in London is thought to be in six figures. Given that the home is in the country he lives and works in, and he has not lived in the U.S. since he was 5, you can see why he thinks it’s ‘outrageous.’”
Johnson does have the option of giving up his citizenship. If he did so, he would be joining a growing number of Americans: Last year 2,999 people renounced their American citizenship or green card status, the largest number ever revealed by the U.S. government.