Love him or hate him, you have to say that Boris Johnson makes a very good point about FATCA. Having been hit with a US tax bill due to his unwanted dual citizenship, Johnson – who is as British as they come in all fairness – says he will not be paying it.
It’s a common trait currently among US expatriates who share his frustration, but perhaps someone who not-so-secretly harbours political ambition which could lead him all the way to 10 Downing Street would have been best off remaining silent…..
There’s not much normal about US tax law in the eyes of the British, particularly in its treatment of those no longer residing in the country. Expats are required to pay tax back to the IRS if their own local tax rate is lower than that of the States. This means many things, like the idea of working in a tax-free jurisdiction such as those found in the Middle East is rendered completely pointless, or people with no affiliation or interest in America still find themselves required to make donations to the US economy, even if they have never been there and never intend to. It’s a pretty odd concept.
Capital Gains Tax
Boris Johnson isn’t actually facing an income tax bill, the IRS fancy getting their hands on 15% of the capital gains he made on the sale of previous residences. The UK doesn’t tax these, the US likes to.
That he is annoyed, is understandable. If he had renounced his unwanted citizenship years ago it would have been a relatively inexpensive process, however, as of this year, renouncing has become rather popular, and as such the price of the simple procedure has been jacked up, and a newly introduced exit-tax has been brought in.
So, although Boris has been outspoken in his intent to refuse to bow to IRS pressure on his private capital gains, he may be better served by highlighting the predicament many people with accidental dual citizenship now face as a result of FATCA.
The burden this legislation places on foreign financial institutions and US-related individuals is nothing short of bewildering. Boris could perhaps look at bringing to light an issue which is inherently related to America’s refusal to worry about what happens within their own borders first (equal rights, human rights, gun laws, and racism for example), and instead go reaching into other destinations and individual’s affairs, the majority who have little or no interest in anything to do with the good old USA and it’s legal viewpoint……