[DoofusOfDeath]

AFAIK, U.S. imposes income tax on all of its citizens, even those who reside in other countries. IIRC it applies to all earnings above $110k(?). There's also the notoriously difficult hassle of complying with FATCA's [0] reporting requirements.

I would imagine that sours the value proposition quite a bit, at least for U.S. citizens.

[0] https://www.irs.gov/businesses/corporations/foreign-account-...

[MrPowers]

US citizens can lower their effective tax rates by moving abroad, but it's complicated. Expats can take advantage of the foreign earned income exclusion that you alluded to and are not subject to state taxes. The savings can be quite large - email me for more details.

FACTA is burdensome if you have foreign bank accounts. You can avoid having foreign bank accounts to sidestep those rules.

[edanm]

(not a lawyer or accountant, but know a bit about this)

That depends on the country. Some (I imagine most?) countries have deals with each other when it comes to taxation, to avoid double taxation.

So if you're earning a salary in, say, Israel, then you only have to pay US taxes on money that hasn't already been income-taxed in Israel. Therefore, whether you're paying more taxes than locals depends on whether the tax rate in the country is higher or lower than in the US. If it's higher, then you end up not having to pay anything extra.

That said, these things get tricky and there are lots of individual wrinkles. E.g. freelancers typically have to pay taxes either way here, afaik. Then again, those taxes aren't doing nothing - they're paying for you to have a US social safety net of some sort.

[MrPowers]

Most countries follow territorial / residence based taxation. People that live in the country are taxed in that country. An Italian that lives in Italy pays tax to Italy. An Italian that lives in the US, pays tax to the US.

A couple of countries have worldwide / citizen taxation (i.e. the US). A US citizen that lives in Singapore will pay tax to both Singapore and the US. They pay tax to Singapore and can claim a tax credit on their US tax return. They can also claim the foreign earned income exclusion deduction.

[unishark]

> A couple of countries have worldwide / citizen taxation (i.e. the US). A US citizen that lives in Singapore will pay tax to both Singapore and the US. They pay tax to Singapore and can claim a tax credit on their US tax return. They can also claim the foreign earned income exclusion deduction.

So it ends up working out like residence-based taxation for most people anyway, but with more steps? Except I guess if the country has a lower tax rate than the US, then you'd need to pay the difference?

[esrauch]

I'd actually have assumed they expect these people to still be paid into their US bank accounts in USD (or your EU account in Euros or whatever), and not pay any income tax to Barbados regardless; effectively a year-long vacation visa, not actually a work visa.

[throwaway1777]

Yeah, you won’t really save on taxes. The real benefit is if you want to work from an island and go to the beach a lot. Hurricanes are the main issue on that during this season.

[frank2]

>There's also the notoriously difficult hassle of complying

I would've thought that the hassle came when the American switched to a non-American employer or ran a business outside the US. I would've thought that if the American is getting all his or her income from an American employer the hassle could be mostly avoided (even if he or she is residing outside the US) especially if the American is merely continuing to work a job he or she had while living in the US.

But maybe I am wrong.