The IRS has gone after Boris Johnson, current London mayor and potentially the next prime minister of the United Kingdom, because Mr. Johnson sold his house for a profit and because Mr. Johnson holds a US passport. He was born in the US (he left when he was 5) so naturally the Internal Revenue Service feels that by virtue of this it is owed some of Johnson’s money. Under the law as it stands the IRS has a case, if an immoral one. Johnson has however told the IRS to take a hike. As he should.
But Johnson’s lucky. He’s famous and powerful. Millions of other Americans overseas are wrapped in our ridiculous taxation laws like moths in a web.
The number 1 priority of the new Congress should be to radically simplify the tax code in the United States. Given that the IRS has been weaponized and that the complexity of the tax code costs this country billions and billions in productivity and general stress, there is no more important area of attention.
Of course Obama would never sign a real overhaul and I mean OVERHAUL of the tax code. But the foundation can be laid for the next president and the code can be made a primary issue in the 2016 election.
(From The Menger Center)
In a perfect illustration of just how ridiculous the US government’s tax policies are, Mayor of London Boris Johnson is being pursued by the IRS for capital gains taxes he owes for selling his residence in London. Apparently Mr. Johnson was born in New York and, despite the fact that his parents returned to Britain when he was five years old, has never given up his US citizenship. Like many other people who through no fault of their own become United States citizens, he never realized that the US government, situated as it is across an ocean, claims to be the rightful owner of a substantial portion of his income and assets. If Mr. Johnson hasn’t paid capital gains tax on the sale of his house, I’m assuming that he also hasn’t filed a yearly Form 1040 tax return, nor has he probably submitted his annual Report of Foreign Bank and Financial Accounts (FBAR). I’m sure IRS is salivating right now just thinking about all the penalties, back taxes, and interest they can charge him.
The sad thing about this situation is that it takes a prominent example like this to expose the absurdity of US tax laws. US citizens living abroad have for years been seeing their access to foreign bank accounts cut off due to over-reaching laws such as the Foreign Account Tax Compliance Act (FATCA), and the situation will only get worse. While Mr. Johnson may end up getting a slap on the wrist due to his political stature, the same cannot be said for otherinnocent victims, not just the accidental Americans, but those who have lived and worked abroad for years and decades and now find themselves shut off from an international banking system that now sees Americans as toxic.