[nshelly]

Not quite clear how they can "waltz off with their proceeds." They would be required to pay taxes on any income they earned in the US, unless they figured out a way to actualize the income earlier (e.g. Eduardo Saverin renouncing before Facebook's IPO). Sure, by moving to the resident-based tax system used by nearly every other country in the world (China is trying to copy the US system and Eritrea requires you to pay an "expat" tax if you want a visa to return), the US expat could take their US-based K-12 education and leave and work elsewhere, but that's not quite the same. People pay for their college education. An excellent education system also serves the domestic purpose of having an informed citizenry to pass good laws, and attract the best and brightest immigrants from around the world.

I think the biggest reasons other nations don't tax overseas income is because they don't have the power to force a special exception for their expatriate citizens (e.g. Greek citizens working in Canada). The US is using its position of power to require these overseas banks to modify all of their accounting and reporting systems to continue to do business in the U.S. This has large issues of fairness and generates animosity.