Former US Citizen Boris Johnson Clobbers the British Pound

Probably not many people who follow this blog are interested in European politics, but I am, perhaps because I hold dual citizenship. I was born and grew up in the United States, but because my mother was an English immigrant, I also hold British citizenship and passports from both countries.

What concerns me is the threat that the UK could leave the European Union, a so-called “Brexit.” The British are to hold a referendum this summer in order to decide whether to stay in the European Union or leave it.

I definitely hope that the UK stays in the Union. One of the advantages of being a citizen of one country in the European Union is that you have the right to live, work, and travel in all European Union countries. I have no interest in getting a job in Europe, but I do spend quite a bit of time on the continent, mainly in France and Spain. My British passport gives me the right to stay as long as I like. If the UK leaves the European Union, will I lose the right to stay for months at a time in Spain?

The mayor of London, Boris Johnson, threw a monkey wrench (or “spanner” as the Brits say) into the works today by declaring that he is in favor of a Brexit. The pound sterling reacted by falling two percent against the dollar. His backing of a Brexit increased the perception that the Brexit might happen and have negative financial consequences for the UK.

Changing the subject, I will point out that Mayor Johnson, like me, was born in the United States and had dual US-UK citizen Unlike me, he renounced his US citizenship a few months ago. (Before he renounced his US citizenship, he was therefore legally qualified to run for the office of president of the United States.) Why did he renounce his US citizenship? The US Treasury wanted him to pay the a reputed 100,000 pounds sterling in capital gains taxes, even though he neither lived or worked in the USA and earned his money exclusively in the UK.

The US government expects anyone who holds US citizenship to pay US income taxes no matter where in the world they live and work, even if they never set foot on US soil. To my knowledge, it’s the only country who does that. It strikes me as unjust for a person to have to double taxation on income, once to the country where the person lives and works and again in the country where the person holds citizenship. If a German citizen immigrates to the United States, that person pays US taxes, and Germany does not try to double-tax the person’s income. However, if a US citizen moves abroad to work, the person has to pay taxes in the country where the citizen lives and works and on top of that in the United States.

Johnson ran into trouble with the US Treasury when he sold a house he owned in London for a 730,000 pound profit. (The price of London real estate has skyrocketed.) The US Treasury sent him a bill for the capital gains on the house. He settled that matter and paid an undisclosed amount to the US Treasury before renouncing his US citizenship.

Getting back to the original topic, I sympathize with Mayor Johnson’s double taxation problems, but I regret that he has endorsed a Brexit.

By the way, a plug for my latest book. Click on the image of the book cover in the left sidebar to see information about the book on Amazon.