Boris Johnson, the Mayor of London, is finally saying “Cheerio” to his friends across the pond.
The American-born Brit (he’s a New Yorker by birth) has announced that he will give up his American citizenship as part of his “commitment to Britain.” The announcement came on the heels of a six-day trade show in the United States to boost interest in London, which he described as “the most congenial business environment in the world.” Johnson was accompanied on trip by Joanna Shields, the former president of AOL, now advisor to current Prime Minister David Cameron; like Johnson, Shields is also a dual American-British citizen.
Johnson made the announcement to the Sunday Times, saying, “It’s an accident of birth that has left me with this thing. I’ve got to find a way of sorting it out.”
This “thing” won’t be so easy to resolve. Despite reports about U.S. citizens fleeing for other countries, it’s not always that easy. There is often a presumption that the decision to walk away from citizenship is all about taxes as our political leaders consistently link patriotism to paying taxes. Johnson will clearly have to be careful because of his political ambitions.
That said, Johnson has made no secret about the fact that he’s not happy about paying U.S. taxes because of his citizenship. U.S. citizens – even dual citizens – must pay tax on their worldwide income. Treaties and foreign tax credits may lessen the pain come tax time but may still result in a significant tax bill.
Last month, Johnson settled a tax bill with the IRS related to capital gains from the sale of his London home, a bill he labeled “absolutely outrageous,” noting that he hasn’t lived in the United States since he was five years old. The amount of the tax wasn’t disclosed though some outlets put the tally close to £100,000 ($153,985 US) though the Financial Times has reported that Johnson’s advisors indicate it was “nowhere near” that amount.
The tax bill was enough to renew a conversation about Johnson renouncing his citizenship: he’s made noise before about giving up citizenship, saying in 2006: “What I want is the right not to have an American passport.”
This time, he may be serious. But is it really about taxes… or is it something more? Johnson clearly has future political aspirations – he’s running for Parliament in the next general election – and his dual citizenship may be an obstacle. In 2012, Mayor Johnson made an appearance on “The Late Show With David Letterman” and admitted that he was American, calling it “a fact I’m trying to conceal to the London electorate.”
Referring to his birth on US soil, he remarked to Letterman: “As you’ve already pointed out, I could be President of the United States… technically speaking.” Renouncing his citizenship would bar him from seeking the highest office in the U.S. – but not from a similar position in Britain.
Rumors have circulated about the possibility of Johnson becoming the next British Prime Minister. Johnson has previously laughed off the notion, telling Letterman, “I’ve as much chance of being reincarnated as an olive.”
