Boris Johnson Refuses to Pay U.S. Taxes

During a recent interview, the mayor of London, Boris Johnson, said he would refuse to pay his U.S. taxes, calling them “outrageous.”  Johnson was born a U.S. citizen in New York, and objects to the U.S. tax that could be due on the sale of his London home. 

Americans are expected to pay tax on their worldwide income, however, tax treaties obviate double taxation, requiring that one country yield to the other.  This system results in a “higher of” tax result, so that the taxpayer pays tax equal to whatever the tax would have been in the jurisdiction that taxed more.  Unfortunately, Johnson may have fallen into such a trap where he failed to consider whether similar tax-saving measures were available in the United States, and he only minimized taxes on the sale of his London home.

One way to avoid lots of U.S. tax is to minimize ties to the United States, the biggest way in the form of U.S. citizenship or residency.  According to reports, Johnson has considered relinquishing his citizenship but has yet to act. 

See Karen Yates and Shannon Smith Retzke, Better Not Pout—Like it or Not, U.S. Citizens Owe U.S. Taxes, Wealth Management, Dec. 2, 2014.