[foobarbazqux]

It's not dual taxation. The IRS deducts the foreign tax paid. So if the foreign country has a higher tax rate, you will never pay US tax. I'm not saying it's a great policy, but it isn't as bad as it sounds. You can always renounce your US citizenship - think of it as a maintenance fee. Yes, draconian.

[gsb]

There are also different treatments of capital gains, and phantom gains which arise only from shifts in exchange rates. For anyone of any means beyond their salary alone these both can lead to paying more combined tax to both countries than either would require individually. Thats dual taxation in my book.

Phantom gains have been particularly bad in the last decade with the falling US dollar. In Australia, house prices in my area about doubled between 2002 and 2012, but with the change in exchange rates, the IRS calculates the gain as if the price had more than quadrupled!

[foobarbazqux]

I didn't realize this part, thanks.

[flyinRyan]

>So if the foreign country has a higher tax rate, you will never pay US tax.

If I live and work completely in a foreign country why would I ever pay US income tax under any circumstances at all? The US is one of two countries on this planet that expect people who's only tie is being a citizen (perhaps never having set foot there and not speaking the language) to file income tax and potentially pay a portion of their income.

Even worse, the US expects you to file with them the way you file in your country of residence. File join in the country you live in? You're expected to file joint with the US then. Which means your foreign spouse who has no ties to the US of any kind (outside of being married to a citizen) will potentially have to pay US tax on their income.

And worst of all, the tax is mostly an annoyance. The true problem is that you have to report every account you have signing power over. That includes pension fund. That includes your companies bank accounts that you manage (which is why an American will never hold such a position in e.g. Switzerland). Lots of banks also won't take Americans on as customers. They don't get enough to warrant dealing with US bureaucracy to report information on these accounts.

>You can always renounce your US citizenship

Which is what many people are doing. The US is one of the few nations on earth that people give up citizenship from.

[foobarbazqux]

Yeah, I was only challenging the dual taxation claim. I agree that the rest is draconian.

Out of curiosity, what is the other country?

[flyinRyan]

I can never remember. I thought it was North Korea but lately I heard it was somewhere in Africa. I only know the US is one of two places and the other isn't part of the developed world so it's not the best company to be keeping.

[gsb]

Eritrea.

[rorrr2]

That's not true. In Switzerland there's a two year line of people waiting to renounce their US citizenships, because they get double taxed.

[foobarbazqux]

> There is a treaty between the United States and Switzerland to avoid double taxation on income, which means that taxes paid to Switzerland by a resident of this country must not necessarily be paid to the United States. In general, an American employed in Switzerland can expect to pay at least as much tax to the various Swiss government levels as he would have to if he were paying tax in the United States.

http://bern.usembassy.gov/general_information.html