Large, complicated issues can seem abstract at times. That is why, historically, various organizations have identified someone to be a “poster child” whose case stands also for a larger cause.
For the issue of offshore taxation of foreign accounts, there is now a leading candidate for this role. His name is Boris Johnson, the U.S.-born mayor of London. In this post we will update you on his ongoing struggle with the IRS over the taxation of profits from the sale of his house in Britain.
As we noted a few weeks ago, in our November 28 post, Johnson’s case highlights the problems that many American expatriates face in remaining in compliance with U.S. tax laws.
Virtually alone among the countries of the world, the U.S. insists on taxing income earned abroad. The U.S. has also pushed for other countries to sign intergovernmental agreements to enforce the Foreign Account Tax Compliance Act (FATCA), the sweeping new law that imposes still more pressure on expats to jump through Uncle Sam’s tax hoops – despite also paying taxes in the countries where they are residing.
Small wonder, then, that growing numbers of U.S. taxpayers who live abroad have given up their passports in the last few years rather than submit to double taxation.
Boris Johnson has not given up his passport; he retains dual American and British citizenship. But he says he hasn’t lived in the U.S. since he was a child of five and shouldn’t have to pay U.S. taxes on capital gains from his real estate transaction in the United Kingdom.
The poster child description fits him well. At 50, he is of course not literally a child. But he is a highly visible figure, with a new book out about Winston Churchill and a willingness to use his public position to take on the fairness of the way the U.S. taxes offshore income.
The larger issue, moreover, does not only concern the taxation of the 7.6 million Americans living aboard. It also involves the tax treatment of offshore holdings of all U.S. taxpayers who may be subject to America’s stringent reporting rules.
Source: Wall Street Journal, “London Mayor is Poster Boy for Expat Woes,” Laura Saunders, Dec. 4, 2014