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and
now he's preparing to go head to head with the IRS...
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November 26,
2014
Sovereign Valley
Farm, Chile
I can't say
I've known too many guys in my life named 'Boris' who were shy about
standing up for themselves.
The name
itself means 'wolf' in an extinct Turkic language.
And if the
current mayor of London Boris Johnson is going go to toe to toe with the
IRS as he has stated, I certainly hope the translation is accurate.
Mayor Johnson
is what we call an 'accidental American.'
Even though he's
British and grew up in England, he just happened to be born in New York.
Whether his
parents realized it or not, and whether they wanted it or not, that
instantly made baby Boris a citizen of the United States.
Fast forward a
few decades, and Mr. Johnson had pretty nasty taste of life as an
accidental American.
It was 2006.
The then 42-year old Johnson was leaving England with his family for a
summer holiday in Mexico, when they had a flight connection in Houston.
Upon arrival,
he stood in the line for 'non-citizens' with his family, and when it was
their turn, the immigration officer said, "[Y]ou have to travel on
an American passport if you want to enter the United States."
Problem
#1: he didn't have a valid US passport. So Boris Johnson was refused
entry to the country of his birth due to this administrative
technicality.
His wife was
sent on to her connecting flight, but Boris had to buy a brand new
ticket, fly to Madrid, and finally connect again from there to Mexico.
After this
absurd affair, Mr. Johnson posted a very public (and hilarious) note on his website to renounce his US
citizenship, in which he said, "I make this formal, public, and, I
hope, legally valid renunciation. . ."
Problem
#2: this renunciation wasn't legally valid.
In order to
renounce your citizenship, you have to jump through a bunch of hoops and
actually get the government's consent to do so. You cannot do this of
your own volition.
Think about
that for a moment: in the Land of the Free, you cannot freely renounce
what you never signed up for to begin with. Bazinga.
Problem
#3: Fast forward a few more years-- Mr. Johnson sells some real
estate in London.
And even
though he had publicly renounced his US citizenship, and even though the
profit isn't subject to any local tax in the UK, the IRS still wants its
fair share.
In other
words, this person who had not lived in the US and just happened to be
born in New York, who had already made good faith efforts to renounce his
citizenship, was now being charged tax from the sale of a piece of
property located IN ENGLAND.
Enough was
enough, and Johnson went ballistic.
He now claims
that he will REFUSE to pay, denouncing the Land of the Free's
"incredible doctrine of global taxation."
It is
incredible. The US is one of the only nations on the planet which taxes
its citizens on their worldwide income, even if they live overseas.
This is a
dubious honor that America shares with the likes of... Eritrea.
What's even
more incredible is that if Mr. Johnson wants to go through the legal
process of renouncing his citizenship at this point, it still won't get
him off the hook with the IRS.
And according
to US immigration law, anyone who renounces US citizenship to avoid tax
(which Mr. Johnson is clearly griping about) will be legally BARRED from
entering the US ever again.
This is a
completely absurd way to treat people... but one that has become the norm
in the Land of the Free.
For most
people, renouncing citizenship is a pretty extreme idea. But as we've
written before, there are other options out there to legitimately reduce
your tax bill.
We've
discussed moving abroad-- where between the housing deduction/exclusion,
the foreign earned income exclusion, and SEP contributions, you can take
in roughly $200,000 annually with minimal income tax.
The foreign
earned income exclusion doesn't generally apply to most investment gains,
though.
In this case,
Puerto Rico presents a unique option.
Because Puerto
Rico is a US commonwealth, it has its own local tax system. And US
citizens who obtain legal residency in Puerto Rico and fall under the
local tax jurisdiction are no
longer required to pay US Federal Income tax in most
cases.
The reason
this is interesting is because recent legislation in Puerto Rico provides
a lot of major
incentives for new residents, including a 4% corporate tax in certain
cases, and TAX FREE
capital gains.
In other
words, you can legally dodge most US Federal Income tax, capital gains
tax, corporate tax, etc. by going through this process.
You can read
more about it in this free report: https://s3.amazonaws.com/sm-cdn/blackpapers/Puerto+Rico-4f0re35e.pdf
It's a scaled
down version of a more actionable 'black paper' that was sent to members
of Sovereign Man:
Confidential a few months ago; hopefully it gives you a
small taste of our premium service.
PS- watch out for our Black Friday/Cyber Monday promotion
coming later this week. You won't want to miss the incredible savings.
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SovereignMan.com is intended to provide personal tax or financial advice.
Before undertaking any action described in this letter, financial or
otherwise, you should discuss your options with a qualified advisor-- tax
accountant, financial planner, attorney, priest, IRS auditor, Bernie
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