They should abolish this silly rule and go with what everyone else does: either tax US corporates on global earnings and allow deductions for foreign taxes paid, or tax territorial earnings only.

Also (note that I am not an accountant or lawyer and this is not advice), most ordinary people won't see any problem with taxation while abroad beyond the actual inconvenience of filing a 1040 because the foreign earned income exclusion (https://www.irs.gov/individuals/international-taxpayers/fore...) allows you to exclude foreign earned income up to $100,000 from US taxation. Since ordinary people pretty much all earn less than this, they only have to pay taxes to whatever country they are actually in. Only people who are rich enough to hire accountants have to worry about double taxation, and they can probably avoid it by other means that are well-studied among rich peoples' accountants.

Retirement savings, stock options, real estate, and any sort of investment account makes your U.S. tax return go from "a 1040" to a towering mountain of special forms. A lot of them also lose you the right to e-file, for some reason. And many aren't supported by tax software, or are handled incorrectly.

A lot of "foreign" banks – i.e. your _local_ banks – won't even talk to you. They tell you to make your investments in the U.S. instead, so you get to pay international wire transfer fees and foreign currency exchange fees on every investment. And if you want to move it back, you get to pay them again.

You won't necessarily owe any tax in the U.S., but you sure pay for it in either filing time (10s to 100s of hours) or expat tax accountant fees.

And, extra maddeningly, a number of American institutions won't even talk to you, either.

Try calling up Vanguard or Charles Schwab if you're just a normal person who lives abroad and see how quickly they'll tell you "sorry! we don't want your business"

Even if you still have a permanent US address (i.e., not just some post box).

Well that and most banks refusing American customers because they don't want to deal with FBAR/FINCEN reporting.

My American friends here in Europe have a really difficult time opening a bank account due to this rule.

> Since ordinary people pretty much all earn less than this..

Ever lived in Switzerland? Or London?

> I am not an accountant or lawyer and this is not advice..

It's worse than that, it's just ignorant of the tax and financial reality of being an overseas American.

It's a pretty terrible systems.

Some Dutch people in the Netherlands who were incidentally born in the US (ergo, also US citizens) but have never lived or worked in the US are now presented with the absurd scenario of actually having to do what you suggest. Of course this is just one country; in principle it applies to anyone who returned home to another country after being born in the US.

Here is the case of a woman, who was taken by her parents back to the NL as a baby, now has to establish herself first in a country in which she's never worked or lived in order to renounce an unwanted citizenship. She must get a social security number, file six years of previous taxes to a foreign country, and only then can she seek renouncing of her US citizenship. In case you were unaware, simply renouncing also costs several thousand dollars.

https://nos.nl/nieuwsuur/artikel/2044332-amerikaanse-belasti...

http://www.dutchnews.nl/news/archives/2015/06/us-tax-service...

So yeah, just give it up! Piece of cake! /s

"The Exit Tax is computed as if you sold all your assets on the day before you expatriated, and had to report the gain. Currently, net capital gains can be taxed as high as 23.8%, including the net investment income tax."

Slaves in antiquity could commonly buy their freedom, too.

When you give up your US citizenship and the process is complete, as far as the US is concerned, you might as well never have been a citizen at all. This means that when you want/need to visit the country (such as to visit a sick or dying family member), you can be denied entrance - the claim they'll use is that you don't have enough "ties" to your new country for them to be certain that you won't try to stay illegally.

While not everyone goes through that, it can and does happen.

I guess that's better than the alternative: being treated worse because you're deemed a "traitor" or "deserter" for giving up US citizenship.

> This means that when you want/need to visit the country, you can be denied entrance

This I can understand. You aren't a citizen anymore and thus have the same rights as any other foreigner visiting the US.

If there is no further discrimination against you for being a ex-citizen, I personally don't see why ex-citizens shouldn't have the same requirements as non-citizens for entry.

> the claim they'll use is that you don't have enough "ties" to your new country for them to be certain that you won't try to stay illegally.

Yeah, that's extra shitty.

That is unless you're a rich company - then you can create shell entities with effectively no domicile that earn income, but aren't taxed in any country.

Corporations are people, my friend. People with extraordinary abilities.

The US has very strong lock-in with regard to taxes, and they don't hesitate to exploit it.

A follow on hypothesis would be that a country having a larger percentage expatriate population compared to another all other things equal would have more global outlook e.g. the local population is more favorable towards immigration and free trade, and has a more accurate knowledge of the details behind world events.

The only possible downside is the implied bureaucracy. Not all countries are good at minimizing that.

<sarcasm/> (as an EU-citizen)

I think you're missing the part where anyone (well, most) who live abroad is actually paying anything.

(I'm not from USA or currently living abroad but i think that is "fair")

British, Dutch, and German citizens were evacuated by their governments.

[0] https://travel.state.gov/content/travel/en/YemenCrisis.html