Retirees don't earn income, so don't pay income tax. Increased demand for housing raises prices for everyone including natives. And typically, retirees require healthcare services well above the population average.
Retirees absolutely pay income tax. Withdrawing from a traditional IRA/401k generates ordinary income at the current federal tax rate. And any capital gains is taxed (albeit at a lower rate) when sold. It's a fraction of what they likely paid during their career, but it is not nothing.
Depending on the country of retiring, this could have majority tax implications. It's a big reason why people choose to retire in certain states: additional income tax on retirement income is possible, depending on the state.
Even if not zero, retirees' income is much lower than working people on average, and that income is taxed at lower rates. Further, tax paid to the US doesn't help the retirement country.
If they're residing in the other country, they're supposed to be paying income taxes to that country, in addition to taxes to the US. The taxes to the US will probably be canceled out by the tax exemption they can claim for the taxes paid locally though, but they still have to file in the US unless they renounce their US citizenship.
Very few people pay income taxes to a foreign government that they reside in unless they are actively working and collecting a paycheck. A passive income stream such as collecting social security or a pension is very rarely taxed. Even things like collecting rent as a landlord back in the home country or earning interest on a savings account there, are also very rarely taxed.
Then they're cheating on their taxes, and that government should probably look into how that person can afford to stay there with zero income. A lot of countries have tax treaties with the US to cover this sort of thing.
> Retirees don't earn income, so don't pay income tax.
The government can and often does find other ways to tax people.
> Increased demand for housing raises prices for everyone including natives.
While true locally, at a national level immigration is typically small compared to native populations. It is a manageable problem.
> And typically, retirees require healthcare services well above the population average.
In other words, they will be forced to put money into the local economy. They’re paying out of pocket, not on public assistance.
Comparatively wealthy foreigners that spend a lot of money on the local economy is any government’s wet dream. It’s a significant boost to their tax base and soft political power. I plan on retiring in a country like Thailand because as long as you don’t criticize the king, you’ll be treated like one.
Thailand is an amazing country and dollars/euros/pounds go a long way. But there are also a ton of Westerners who either ran out of money (or never had any) who live like leeches and even some who "begpack." Plenty more who just barely get by as a language instructor or such.
I'm not claiming there are no productive or welcome foreign retirees -- there are many. But I was responding to "xenospn"'s comment that they bring in money for free, which is absolutely not universally true.
How can you legally stay in Thailand with no retirement or work visa?
I don't remember the details (I had a work visa and retirement is still 2 decades away at least) but to get a retirement visa (valid for one year) you need proof of sufficient funds and health insurance.
