Actually, most countries do this.

Don't confuse the taxes levied on a US citizen's income when living abroad with Apple's situation.

Apple is a US corporation.

Not sure why this is downvoted to gray, it is correct. In most countries, if you are a tax resident, your foreign income is taxed. What is unusual about US is that it also taxes foreign income for US citizens that are living abroad, almost no countries do this.

Well, we are in good company with Eritrea I guess... https://en.wikipedia.org/wiki/International_taxation#Citizen...

I think because the original comment is ambiguous. It isn't clear whether by "income I earn overseas", he's referring to income earned while a tax resident of another country (for example living and working there) or income earned while a tax resident of the US (for example through overseas investment or < 1yr work).

One commenter appears to have assumed the former, the person replying assumes the latter.

Even foreign income that the host country considers to be a pension with special tax treatment (like 401k)

http://www.afr.com/business/accounting/irs-chases-us-citizen...

I know someone who is giving up US citizenship on return to Australia for this reason.

Well if you look at it from a Govt's perspective it makes sense. Even though you are US citizen living outside US you still part of the club for which you have to pay membership fees. If you dont like that you are free to leave the club and take some other citizenship.

No, because you don't cost the govt anything. You don't use any public services in the USA, you use the public services where you live. You're paying for literally nothing but a passport.

> You're paying for literally nothing but a passport.

Which is exactly what I meant, you are paying the membership fees whether you use the services or not. The US govt knows that, if you dont like you are free to give up that passport which I am sure you wont.

Renouncing US citizenship is not something you do by filing in a form and sending it along with your passport to the US embassy. It can take years, plus many lawyers, and in the mean time you have to continue paying taxes, and pay for the process thereof.

It's not that simple.

and it even costs a fixed fee to get a passport.

If switching citizenship was on the level of ease like switching rental apartments, complex but doable, then you'd have a point, but you generally don't have that much choice in your citizenship. It is one of the last bastions of socially accepted generational discrimination. Countries try to keep you in their club and try to keep others out of it, even if discriminating between people based on where they were born is objectively morally wrong.

Not that I think it's a good idea to get rid of borders today, just that a natural extrapolation of western morality, which favors choice over birth, leads you down a path to a borderless world.

I am a citizen of a foreign country, I have a job in that country, I store my money in that country, I buy practically all of my products in that country. Why should the fact that when I was a baby, the US government decided to give me citizenship cause me to pay more taxes (or at least pay more to file) than my neighbor who is not a US citizen?

So why dont you renounce your US citizenship?

The US govt knows that most non resident US citizens even if they dont like paying taxes are still going to pay it because those citizens still want to be part of club US.

Renouncing citizenship is expensive and non-trivial. The US global taxation regime is a trap.

Yes I know its convoluted but do want to keep paying taxes every year or just renounce citizenship , it's your choice.

Just renouncing US citizenship costs several thousand dollars in legal fees and could take up to 5 years. What you are suggesting is similar to telling someone who is complaining about rent prices to just buy a house.

Well why doesn't the US government just decide to tax its citizens the same as nearly every other country in the world? You're saying that the solution to a bad system is to move, rather than just making the system less terrible.

I am talking about realistic scenarios, that person can renounce US citizenship, changing the US tax code is not in his hands, is it?

It is not correct until that "As an individual I am taxed on income I earn overseas. Why shouldn't a corporation?" implied living overseas as well.

I always thought this kind of made sense. I mean, you still enjoy the benefits of being a US citizen. You are also more likely to use the embassies and consulates.

"Apple is a US corporation"

But the overseas profits were earned outside of the US by non-US corporations, so why should they be taxed in the US? If I buy shares in Samsung, it doesn't suddenly have to pay 35% of its Korean income as taxes to the US.

> Apple is a US corporation.

IIRC, the US considers corporations as people. Am I wrong?

You don't lose your constitutional rights just because you form a corporation, a nonprofit, a group, or a party. That's the meaning of corporations are treated like people, laws restricting the ability of corporations to express themselves have to be weighed against the owners rights to express themselves.

I wasn't saying that I would loose my rights once I form a corporation. I was trying to say that corporations, as considered people, can [should?] be treated as such regarding taxes or expression or fill-the-blank just as you or I am.

If I am taxed by the US for every single penny I earn regardless of source, why should not US Corporation LLC Inc? We are both people. We both have income. Perhaps we both have foreign bank accounts. Every inch of my income gets taxed but US Corporation LLC Inc gets to stash big monies with no regard? I am confused.

When you invest in any corporation as a US person, you are only taxed on income you receive as dividends, or capital on your gains if you sell the investment (and any imputed income); not on your share of the undistributed income of the corporation. It's the same for a US corporation, they generally conduct business overseas through a wholly owned subsidiary corporation, organized within the overseas jurisdiction. If the subsidiary passes income back to the parent (a dividend), the parent will have to pay income tax on that; if the income remains within the subsidiary, so does the tax burden.

If the US corporation directly accumulates income overseas, then it would be liable for US income tax as well.

It's a lot easier for a large corporation to arrange its affairs in this manner than a natural person, though.

Also the corporation has to pay taxes on it's income, then you have to pay taxes on that same income if it's paid to you.

You actually have it better than the corporation!

That's right. You have to pay taxes when you produce your work overseas. Corporations do not have to pay taxes when they produce their work overseas. It sounds unfair, but if you subscribe to the idea that corporate profits are more important than human life, as many in the US do, it makes perfect sense.

Only for the free speech ammendment, and if you reinterpret "free speech" as "money". The most ironic part of that decision is that it's called Citizens United