Taxes

U.S. Government Tries to Mug the Mayor of London

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Boris Johnson
Greater London

It was only a matter of time before America's economic grab for global imperium, embodied in tax laws and, particularly, the Foreign Account Tax Compliant Act (FATCA), ran up against somebody who might actually be able to push back. Not content to roll those who reside within its own borders, the federal government insists that U.S. citizens and even long-term residents who now live abroad and may not have had a glimpse of amber waves of grain in many years owe Uncle Sam a piece of the take—and that financial institutions around the world must snitch on them to ease the mugging.

Such a broad definition of those subject to the IRS's tender ministrations reaches far and wide. It reaches so far that American tax authorities say Boris Johnson (pictured), the mayor of London, owes capital gains taxes to the land of his birth, even though he hasn't lived here since he was five years old.

The thing about Boris Johnson, who says he won't pay, is that he's not your average pushover for the thugs who keep the U.S. government fat and happy. He's not just the mayor of an important city, but he's a player in Britain's ruling Conservative Party, and discussed as a potential future prime minister of the country.

Perhaps ironically, the U.K. was once forced to spin off an important North American subsidiary partially over tax issues. That subsidiary appears to have learned the wrong lessons from the unpleasant incident.

All of which is to say, while the U.K. knuckled under to U.S. demands that it act as a deputy American tax collector, Johnson is pretty well positioned to put a hitch in that arrangement.

The question is whether Johnson, as a connected poitical figure, makes separate peace with the IRS, emphasizing that the IRS's reach applies only to the powerless. That might have some interesting international ramifications. Or will he carve out a wider exception that gives others a little relief from America's official muggers?

Or maybe the IRS will just exercise America's imperial muscle and try to make even Johnson turn out his pockets to demonstrate its power.