http://www.internationalman.com/articles/this-appalling-prac...
This is a really unusual part of the US tax code.
Oh hey, it's over $100K now:
https://en.wikipedia.org/wiki/Foreign_earned_income_exclusio...
I personally have no problem staying under $100k; I live in Germany and work at a university. But imagine if you lived in Switzerland or Norway. Somewhere with a high cost of living and with a currency that is very strong vs the USD. Then it doesn't take much to go over that 100k.
And even though I don't have to pay US federal taxes (being under that $100k), I still have have the file state taxes, federal taxes, and an FBAR. Every single year. The time and effort is an annoyance, but what bothers me most is the principal. I don't live in the US; I don't use its services; and still, every year, I have to allocate a weekend to provide them with every single detail of my financial life.
---Alex
Wrong question and answer. Assuming what you say is correct (I'm not a tax expert), the question is why is that the law and how can we fix it? The situation you describe is morally wrong. You are getting no protection, use of infrastructure, or other aspects of the services that our taxes provide. Therefore, you should not have to pay tax. Rather than propagate an unfair situation to other entities, the situation should be fixed. A paraphrase of your comment is: I'm getting treated unfairly, so others should also be treated unfairly.
Perhaps it would be more fair if there was some intermediate tax rate that accounted for services that you aren't able to take advantage of...but at the same time, I think additional rules and exceptions are the last thing the tax code needs.
But you're right that I'm not necessarily so much insistent that business should be subject to that kind of taxation as that I think it should be consistent.
As an American citizen, I'm still subject to federal income tax, even on income earned while I'm residing outside the country, for work done entirely outside the country, for a non-American employer. That being the case, I see no reason why similar rules shouldn't apply to American corporations. If we say an individual still derives services and value from their citizenship even when outside the country, and thus needs to pay in to support that, why not also American businesses?
I don't know enough about business structures and tax code to say _how_ to make it happen, but from a sense of fairness, I think that roughly equitable rules for business and individual entities is a good thing.