[saghm]

IIRC US citizens are still required to pay income tax to the US even when working and living abroad, which definitely stops some money from flowing outwards. There's probably a way to complete renounce one's US citizenship, but given how it likely would be hard to reenter the country to visit family or friends once you do that, I think the tradeoff ends up being a lot more than people are willing to give up compared to simply moving abroad.

[joshvm]

> US citizens are still required to pay income tax to the US even when working and living abroad

Strictly, this is true. You still have to file a tax return as an expat and you have to declare your income (which is why in lots of other countries, banks ask you to declare if you're American when opening an account). However in practice most expats are eligible for tax credits against foreign tax paid (under double taxation agreements), and many are exempt altogether if they're earning under a threshold. And really if you're earning more than the FEIE [0] then you can probably afford an accountant to minimize your tax liability anyway.

There should be no need to renounce citizenship unless you're really dead set on leaving the USA. You can also naturalize somewhere else without a penalty, the State Department specifically says

> A U.S. citizen may naturalize in a foreign state without any risk to his or her U.S. citizenship.

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

[Retric]

Renouncing US citizenship happens but the the exit tax make it makes it less appealing for the wealthy. “The exit tax is calculated as a capital gains tax if all assets were sold on the day of renunciation.”

There are also social security implications for workers which make switching midway through a career more costly.

[CameronNemo]

I wish states could do this. Instead people can make a bunch of gains while living in Oregon (for example), then move to Idaho and not owe anything to Oregon. Even if the capital gains were accrued while they lived in Oregon and benefited from that residency.

[drugstorecowboy]

How would this work exactly? I buy stock in Oregon and live there for 5 years holding the stock. I then move to Idaho and sell the stock for a profit. How would you calculate what percent of the taxes should go where? Was Oregon doing something during those five years of your stock sitting in an account that makes them deserve that money? Perhaps if Oregon had similar tax policies to Idaho people would buy stock in Idaho and cash out in Oregon balancing out any "lost" taxes...

[jason0597]

If you make less than $112k abroad, you don't have to pay US income tax (as long as you declare it to the IRS)

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

[namlem]

We have tax treaties with moat friendly countries so any tax you pay to the country where you reside is deducted from the US taxes you owe. That means that most Americans working abroad have to pay no US taxes since their domestic tax rate is higher.

[TheSpiceIsLife]

If I recall correctly, US citizens abroad don't have to pay US income tax on income earned abroad that has already been taxed by the local tax authority, under the Foreign Earned Income Exclusion.

[sgjohnson]

This is correct. There’s also a $112k/y exemption, should you pay less taxes on that in your country of residence.