[moeris]

Many of us pay for government services we will never use, though. As a man, for example, I'll never be a recipient of WIC. By your logic, I should never have to pay for these benefits. However, that seems wrong. Even if I never use WIC, Social security, government housing, addiction recovery programs, etc. I should still pay for them because it's good for society as a whole.

Plus, there's the fact that even if you're not living in the US doesn't mean you're not benefiting from citizenship. You still enjoy the privilege of American consulates, being able to travel to certain countries, and certain limited protections and privileges. So it's not like it's _nothing_.

[arcticbull]

Citizenship-based taxation was brought in as a way of punishing deserters during the civil war and simply never dropped.

It doesn't make sense to tax citizens who aren't resident when you are also taxing residents who aren't citizens. That's having your cake and eating it too - which I can only imagine is part of the reason no other country on Earth does this (except Eritrea, who obviously cannot enforce).

If resident aliens have to pay taxes while resident, and can stop when they leave - doesn't it also make sense for resident citizens to be afforded the same luxury?

The state department operates on a cost-recovery basis anyways so if you avail yourself of emergency or consular services you get mailed a bill no matter what.

[edit] Remember if you live abroad you have to pay taxes to that government too! So the question is why is it a fair impingement on your freedom to live abroad to have to pay taxes to two different governments simply because you're an American?

You're being punished as a de facto civil war deserter! The war is over, friend. The North won! Let freedom ring! lol.

[edit2] As @drewcoo pointed out I used the term 'deserter' inappropriately in context, I should have said 'deadbeats.' I was in fact referring to citizens who left the United States around the time of the war and the way they were viewed by congress as not paying their fair share while retaining a vested interest in the outcome of the war. It was a colloquialism used as flourish that was wrong in context. h/t.

[pokerhobo]

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

[arcticbull]

This is not what it seems.

The exemption amount isn't exactly a windfall level ($120K). Amounts earned over that are taxed in both countries - the US and the foreign country - and the only way to avoid double-taxation on that is if the US has a tax treaty with the country [1]. But that treaty generally means you end up having to pay whichever rate is higher: the US rate or the local rate, in aggregate.

More importantly you're not exempt from filing even if you have no net tax obligation to the US.

These returns are not easy to prepare, and so you may end up spending thousands of dollars per year paying one of the likely very few people with experience filing returns to both countries and properly attributing income and deductions.

It gets much, much worse if you want to start a business in the foreign country in which you live because then you're the owner of what the IRS considers a Controlled Foreign Corporation. The paperwork for this is a waking nightmare and will cost you thousands more per year, if you're even in a position to complete it. [2] Notice in [2] the US definitely on of a CFC is also different than the rest of the world.

[1] https://www.irs.gov/businesses/international-businesses/unit...

[2] https://www.investopedia.com/terms/c/cfc.asp

[arcticbull]

> ..the US definitely on of a CFC..

Ugh. ..the US definition of** a CFC...

[judge2020]

> Citizenship-based taxation was brought in as a way of punishing deserters during the civil war and simply never dropped.

Have a resource for this? From what I remember, income tax started around the 1910's with the 16th amendment and grew to take out a large portion of citizens' income when prohibition severely cut sales tax proceeds from alcohol.

[drewcoo]

> Citizenship-based taxation was brought in as a way of punishing deserters during the civil war and simply never dropped.

It was started in 1861 as a way to raise revenue to fight a war.

https://nomadcapitalist.com/global-citizen/citizenship-based...

Deserters would most likely have gone home, remaining citizens and living in the US. And I'm unaware of US IRS attempt to collect taxes from the CSA during the war.

https://teachinghistory.org/history-content/ask-a-historian/...

[vouaobrasil]

The situations are so different though. No matter how hard you try, if you are living in a country, you are going to use SOMETHING that is paid for by taxes. Roads, walking down the sidewalk even, snow removal, throwing away a wrapper in a city garbage can, NOT stepping in glass because someone picked it up, ambulance if you get in an accident, etc.

Whereas if you live in another country for years, you use pretty much NOTHING (except for some consular services MAYBE). Huge difference.

[_s]

You pay for the political, economic and military power that ensures you are somewhat protected when in another country.

Would you rather have a US passport living in UAE or Bali or Australia, or would you prefer to have an Iranian one?

I'm not saying the taxation is "right", as nearly all other nations don't care, just highlighting what folks would argue it's for.

[cperciva]

US taxation applies to dual citizens who don't hold US passports though.

Heck, it applies to people who don't even realize that they are US citizens -- a number of Canadians have been hit by large bills from the IRS after discovering at advanced age that they have a parent born in the USA.

[davchana]

To add more to your point, if one has unknowingly US citizenship (through parents at birth or something) && a local citizenship (where one is living, like India, Canada, UAE, anywhere), that host country is not going to give same protections as compared to somebody with "only" US citizen. For example , US citizen having Iranian Passport in Iran are simply Iranian citizens in Iran Government eyes. (Replace Iran with any country). US citizen working/visiting in Canada, but having no Canadian citizenship, can go ask US embassy in Canada for help.

[vouaobrasil]

I've never been to UAE or Bali, but I wouldn't mind having an Iranian passport in Australia. I can't imagine I would ever benefit from the "protection" of the USA while in Australia. And one could argue that if you are living in UAE, then having a US passport doesn't protect you more than having a Canadian one, so you're not really getting anything more of value from the much more powerful American one over the Canadian.

I realize folks are arguing what it's for, but I don't think their argument holds water.

[aaomidi]

Trust me. You would mind that citizenship.

[thelittleone]

I can assure you from personal experience that holding an Australian passport when in trouble abroad will provide precisely 0 value.

[judge2020]

If I'm not mistaken, you don't need to file taxes if you relinquish citizenship, right? It's not exactly a secret that a large amount of US taxes go to defense, which maintains the US' position as a world superpower, which you benefit from via your citizenship and US passport.

[davchana]

That benefit comes up only if you are not a citizen of host country. If you are a citizen of host country, most of the times US embassies can't help, even if you hold US citizenship.

India specifically prohibits holding two or more, and expect its citizens to renounce Indian one in 6 months or less from acquiring other one. No repercussions as long as you don't go to India or deal with Indian Embassy (which almost every ex Indian has to, family, relatives, stuff in India). Although one can get an equivalent of green card (OCI) without requirements of residency.

[Question50]

No, generally one must provide evidence from the IRS of 5 years worth of tax compliance in order to relinquish.

The majority of US taxes go towards Social Security, healthcare (Medicare), benefits for US veterans/federal employees, etc.[1] Most of these systems are not available to "US persons" who haven't lived/worked in the USA. Those that have worked there will see their US benefits decreased by amounts paid into non-US tax systems.

[1] https://www.cbpp.org/research/federal-budget/where-do-our-fe...

[eesmith]

Bit of nuance. https://en.wikipedia.org/wiki/Accidental_American#Tax_obliga... asserts:

> Tax compliance is not required for renunciation of US citizenship, but only to formally exit the US tax system after expatriation. Consular officials will not inquire about a person's tax status during the renunciation interview, nor is a potential renunciant required to supply a Social Security Number at any point during the process. The common but mistaken belief that tax compliance is required prior to renunciation is encouraged by the US tax preparation industry, often at great cost to unsuspecting Accidental Americans. It appears, however, that a significant number of former US citizens have renounced without any attempt at tax compliance.

[Question50]

The US Dept. of State Foreign Affairs Manual used by consular officials, who have wide latitude in this area:

https://fam.state.gov/fam/07fam/07fam1260.html#M1266

100% though on the US tax preparation industry.

[eesmith]

It used to be that ex-citizens needed to pay taxes on US sources for 10 years. In 2008 it switched to having to pay a worldwide capital gains tax. https://en.wikipedia.org/wiki/Renunciation_of_citizenship#Ta...

I believe that someone renouncing citizenship specifically to avoid paying US taxes, for example, to not fund the war machine, is subject to the Reed Amendment and may be denied entry into the US. As the above link points out, this is nearly unenforceable.

In practice, I believe most US citizens living overseas pay no actual taxes to the US. The Foreign Earned Income Exclusion excludes "your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023)." - https://www.irs.gov/individuals/international-taxpayers/fore... and a number of countries have a bilateral agreement with the US to prevent double taxation.

> which you benefit from via your citizenship and US passport

The large majority of "accidental Americans" don't have a US passport, and may even be surprised that they have US citizenship.

] The very first such [private letter request] request came from a British citizen who stated that he was unaware of his U.S. citizenship; Willard Yates, a retired tax attorney then with the IRS' Office of Associate Chief Council (International) who handled that PLR request, initially expressed disbelief at the possibility that anyone could be unaware of their U.S. citizenship, but states that later, "after working a bunch of 877 PLRs, I realized we didn’t know anything about anything when it came to U.S. citizens working overseas, accidental or otherwise." - https://en.wikipedia.org/wiki/Accidental_American

For these people the benefits are minuscule compared with the negatives, like loss of access to local banking services should the bank not want to deal with FATCA, the expense of finding an accountant who can handle both sets of taxes, and the difficulty of dealing with capital gains, retirement accounts, etc. which may be tax-free in one's home country but not the US, or which may be subject to double taxation.