When I lived and worked in East Africa, I know that most, if not all of my income, was not taxed back in the US because of the Foreign Income Exclusion Act. Basically, for foreign earned income anywhere below ~$80,000 at the time, I didn't have to pay tax, which the limit is now around $108,000 or so.

However, as you point out, that doesn't seem to apply to dividends and capital gains and other types of income [1].

I wonder why it doesn't apply to those other incomes and if it did, whether that would alleviate many of the problems for most Americans overseas. In other words, why not just have a threshold below which all foreign income is not taxed and then tax above it?

I'm curious to learn more about the history of that act and why it developed as it did.

[1]: https://www.irs.gov/individuals/international-taxpayers/fore...