Maybe people no longer want to live in US and it is wealthy that have it easier to actually go through with this?
Or maybe they actually live somewhere else and don't like paying their taxes TWICE. Almost every country in the world (except US) requires taxes based on residency, not citizenship.
For example, being Pole, if I spend more than 180 days in Sweden, I now owe taxes in Sweden but no longer owe them in Poland. That is because Poland recognizes that, while I am Polish citizen, I actually was Swedish resident during that tax year. And have an agreement with Sweden so that it is clear where I have to pay my taxes.
The US doesn't want to play nice and will only provide you with a little bit of credit for the tax you had to pay in another country. But if you earned a lot, you now have to pay it twice.
I actually know 2 or 3 people that work here in Poland that resigned their US citizenship for exactly this reason. Because IRS will hunt you down and demand your taxes even if you don't set foot in US for decades. It has been a topic in our newspapers couple of years ago when we still looked up to US as better place to live and people would need explanation for why somebody in right mind would want to resign US citizenship in favor of Polish.
I have even heard of a person that had to US citizens as parents but never set foot on US soil, that was hunted by IRS to pay taxes.
It is not like people don't have to pay taxes in other countries, though some have smaller rates. To get better picture you would have to look at where they actually went.
> For example, being Pole, if I spend more than 180 days in Sweden, I now owe taxes in Sweden but no longer owe them in Poland. That is because Poland recognizes that, while I am Polish citizen, I actually was Swedish resident during that tax year. And have an agreement with Sweden so that it is clear where I have to pay my taxes.
The US has similar arrangements with many countries, and you are not doubly-taxed. You simply pay taxes at the highest rate of the two (US and <other country>).
Likewise, if you move to the US from a higher-tax country, and the US has a tax treaty with that country, in your first year in the US (assuming you move mid-year), you will owe taxes to both countries, but will only pay the US rate overall. My first year in the US, the US government paid me US$600 because in their eyes, I had paid the UK too much in taxes for the 5 months I had worked there.
The hassle is that you still have to file with the IRS, even if your actual tax liability to the US is zero.
> The US has similar arrangements with many countries, and you are not doubly-taxed. You simply pay taxes at the highest rate of the two (US and <other country>).
But do you see how punitive that is to US expats? It means that they never benefit from tax mitigation efforts in their resident country if the US has higher taxes on that. That, tax-wise, they are perpetually worse off than US residents and their local neighbors.
Think about the effect of this on small businesses (which are hardly alone in their troubles). Small businesses owned by US expats are at a perpetual disadvantage relative to local businesses because they can’t operate purely within the local tax environment. If the US introduces some poorly thought out regulation, like the GILTI tax, they are hit completely independently of the local competition through no fault of their own.
Besides, if the resident country decides to mitigate some local issue by lowering taxes, what business is that to the US? It’s criminal that it uses its own citizens to siphon off another country’s wealth.
My dispute was only with the term "doubly-taxed", which for countries with a tax treaty is simply false.
Nevertheless, you are correct that as a US citizen, you are destined to pay max (USTax (income), OtherTax (income)). I don't agree with this, but it's not called "double taxation".
Maybe people no longer want to live in US and it is wealthy that have it easier to actually go through with this?
Or maybe they actually live somewhere else and don't like paying their taxes TWICE. Almost every country in the world (except US) requires taxes based on residency, not citizenship.
For example, being Pole, if I spend more than 180 days in Sweden, I now owe taxes in Sweden but no longer owe them in Poland. That is because Poland recognizes that, while I am Polish citizen, I actually was Swedish resident during that tax year. And have an agreement with Sweden so that it is clear where I have to pay my taxes.
The US doesn't want to play nice and will only provide you with a little bit of credit for the tax you had to pay in another country. But if you earned a lot, you now have to pay it twice.
I actually know 2 or 3 people that work here in Poland that resigned their US citizenship for exactly this reason. Because IRS will hunt you down and demand your taxes even if you don't set foot in US for decades. It has been a topic in our newspapers couple of years ago when we still looked up to US as better place to live and people would need explanation for why somebody in right mind would want to resign US citizenship in favor of Polish.
I have even heard of a person that had to US citizens as parents but never set foot on US soil, that was hunted by IRS to pay taxes.
It is not like people don't have to pay taxes in other countries, though some have smaller rates. To get better picture you would have to look at where they actually went.