Daniel J Mitchell at Townhall today proclaims:
Johnny Depp Flees France Over Tax Hikes
Yours truly has no interest or concern as to Mr Depp’s chosen place of international abode. That said, Mr Mitchell’s September 3, 2012 piece is headlined based on a WENN post of November 7, 2011 — nearly a year ago and long before the election of Socialist President Hollande. The WENN piece itself came out of a statement in a Guardian interview given by Mr Depp, which was published the day before.
So in web terms it is pretty old news, yet it is not the dated information itself as to why I would term Mr Mitchell’s effort “lazy.” It is due to how his “facts” are presented. Here is the, uh, money quote Mr Mitchell pulls from that November 2011 WENN piece:
Actor Johnny Depp has moved out of France and returned to America because he didn’t want to become a permanent French resident and pay income tax there. …Depp has now moved his family out of France after government officials asked him to become a permanent resident, as he feared he would end up paying tax in both countries. He tells Britain’s The Guardian newspaper, “…France wanted a piece of me. They wanted me to become a permanent resident. Permanent residency status – which changes everything. They just want… Dough. Money… ” Depp goes on to explain that if he spends more than 183 days a year in France he will have to pay income tax in both Europe and America, adding, “So you essentially work for free.”
Mr Mitchell chose to omit this rather important observation from Mr Depp that was in the Guardian interview and which was also at least cited in the WENN piece:
“I’m certainly not ready to give up my American citizenship.”
As we all know also (or should, if we are discussing this subject), Mr Depp’s family is now evidently in some flux given his long-time relationship with French singer Vanessa Paradis — who is also mother of his two 2 children — ended sometime after that interview, during 2012. Prior to that Mr Depp was undoubtedly in France a lot, true; but whatever gossips like WENN (and, in this instance, Townhall) were noting about his “living” in France, it appears he was never actually “residing” there. He and Ms Paradis were a couple, yes, and they had houses, private jets and millions; but for tax purposes Mr Depp appears to have “resided” in the United States.
One would have thought Mr Mitchell would be thrilled Mr Depp was paying taxes to the U.S. and not to France? In any event, Mr Depp must have been seen spending, in French immigration authorities’ opinion, too much time in France to consider himself “non-resident” for tax purposes. From what Mr Depp himself also states, eventually they must have made it plain to him they would no longer tolerate it.
Most Americans appear unaware of this. Every U.S. citizen who “resides” outside of the U.S. and is employed, must each year file an income tax return with the IRS just like Americans do at home. (If you are “resident” abroad and never have, you had better start.) For most countries, Americans resident abroad are granted an “earned income exclusion” on roughly the first “$100,000″ (the upper end increases with inflation each year) they earn overseas.
The result tax-wise is “low” and “middle income” earners living abroad effectively pay taxes only to the country where they reside. The “little guy” is given a “break” by Uncle Sam. But Mr Depp would fall into a rather higher wealth category, of course.
If he were not paying income taxes to France because he was not technically “residing” there while spending perhaps more than half a year there, he was paying them to the U.S. only. If he had applied for French permanent residency, he would, like every other American “residing” in France, have been entitled to his first “$100,000″ earned income tax exemption. Given his lifestyle, that might have filled a private jet’s fuel tank a few times.
Over and above that amount, Mr Depp (and every other wealthy American like himself) is essentially “double taxed”. Meaning the IRS demands taxes be paid on every cent of earned income after that first “$100,000″ eligible to be excluded. As Mr Depp also said, he did not want to pay taxes to two countries.
That he stated it is evidently cause to be dismissive of him, yet why should he have wanted to do so? However, his assertion in the Guardian 2011 interview that the French government had wanted some unfair cut of his “dough” is sour grapes. Evidently they were merely starting to demand taxes given his time spent in the country each year.
After all, if he was for all intents and purposes “living” in France while not “residing” there, why should he pay income tax only to the U.S.? That is why Mr Depp’s point about not wanting to give up his U.S. citizenship is also vital. If he had decided to have “resided” in France, the only way he could have ceased to have U.S. tax liability (so avoiding being taxed by both countries) would have been to give up his U.S. citizenship entirely and become a citizen of France. (Seeking even dual U.S.-French nationality would not have been enough.)
Yet despite Mr Depp having in 2005 been quoted by the Guardian as saying…
‘France and the whole of Europe have a great culture. Most important thing though is that people there know how to live. In America, they’ve forgotten all about it. I’m afraid that the American culture is a disaster.’
…it would appear that renouncing his U.S. birth citizenship was never a life path he seriously considered.