July 31, 2019
Great Britain's new Prime Minister, Alexander Boris de Pfefel Johnson, inspires the same sort of love/hate relationship as a certain novice head of state on our side of the pond. Johnson's fans celebrate him as a self-deprecating man of the people, happy to zip-line across a park waving Union Jacks to celebrate Olympic gold. His opponents mock him as a dangerous buffoon, a gaffe machine, and a bitter chutney of ignorance, racism, and lies. With a "hard Brexit" looming just three months away, we'll soon see if he rises to the occasion like his hero Winston Churchill.
At first glance, Johnson seems the ultimate British toff. He studied classics and played rugby at Oxford, where he struck classmates as a modern-day lord out of Downton Abbey. (Honestly, with a name like "Alexander Boris de Pfeffel," where else could he have gone?) He belongs to London's exclusive Beefsteak Club, where, by tradition, diners address all the stewards and waiters as "Charles." He once said about himself, "You can't rule out the possibility that beneath the elaborately constructed veneer of a blithering idiot, there lurks a blithering idiot."
So why on earth are we writing about Johnson here? Funny you should ask. It turns out he was born in New York City, when his English father Stanley was studying economics on a Harkness Fellowship. And he lived there, in a one-room loft across the street from the famed Chelsea Hotel, until he was five. That meant enjoying dual American and United Kingdom citizenship. And that, in turn, makes him subject to U.S. tax on all his worldwide income, wherever he earns it.
We have no idea how Johnson handled his U.S. taxes for most of his career. But it finally became a sticky wicket in 2009. London real estate was flying higher than a nanny with an umbrella, and Johnson and his wife had just sold their house for a £730,000 gain. Now, her Majesty's Revenue and Customs doesn't tax home sale gains. No problem there. But the IRS wants a piece of anything above a $500,000 allowance — even for taxpayers living abroad!
Naturally, Johnson was not amused, and he had a hard time keeping a stiff upper lip. One reporter asked him point-blank if he would pay Uncle Sam, and he literally sputtered: "No, is the answer. I think, it's absolutely outrageous. Why should I? I think, you know, I'm not a . . . I, you know, I haven't lived in the United States for, you know, well, since I was five years old." That's an uncharacteristically tongue-tied response from a guy who headed up the Oxford Union debating society.
Like most politicians, though, Johnson's promise proved . . . "flexible." In 2015, he paid the American tax to avoid embarrassment before setting out on a U.S. tour. A year later, he renounced his U.S. citizenship entirely, a process which includes paying an "exit tax" on the value of his appreciated assets as if he had sold everything the day before surrendering his passport. Maybe his experience giving up his citizenship helps explain why he thinks pulling Britain from the European Union should be so easy?
Today, Johnson is settling into a far tonier hundred-room house at Number Ten Downing Street, one that comes with everything a modern minister could want. (There's even a Chief Mouser to the Cabinet Office, a cat named Larry.) Even better, he won't owe any tax on the place when he leaves. That's the sort of result we work to create for you. So let's all sit back and enjoy a cuppa while we watch Johnson take on Brexit!