[logicallee]

Yes, the article wasn't exactly clear but pretty much all of the stories (well, I only read a few) refer obliquely to one thing: you are subject to taxation by the United States even while you're a resident abroad, and paying taxes abroad.

It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California. Nobody else (worldwide) does this. It doesn't make any sense.

This is a primary motivation people have for renouncing U.S. citizenship.

[CHsurfer]

US citizen, living in Switzerland. I don't want to give up my citizenship and I don't mind to pay some tax to the US. I did get a great education and attitude growing up there, but the risk of making a mistake could be ruinous to my family (French wife, two kids born here). It's fair that if you make a mistake, you pay a penalty, but with the current rules, it turns into a crime. Very scary because it's so complicated.

[martey]

> It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California.

This is an imperfect analogy (since there is not really a concept of "citizenship" for individual US states), but note that claiming residency in one state while living in another will often require you to pay taxes in both.

> Nobody else (worldwide) does this. It doesn't make any sense.

I think it is pretty clear its purpose is to prevent US citizens from deciding to live abroad in order to pay less income tax. The legislation that requires US citizens to report foreign bank accounts (which some of the people in the BBC article mention) is called the "Foreign Account Tax Compliance Act" [1] is supposed to prevent all citizens from committing tax evasion by hiding funds in foreign bank accounts.

I think there are multiple reasons why you or others could argue that these rules are counterproductive [2] or otherwise detrimental to the interests of the United States, but I do not think they can be dismissed out of hand.

[1]: http://www.irs.gov/Businesses/Corporations/Foreign-Account-T...

[2]: https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...

[philwelch]

> there is not really a concept of "citizenship" for individual US states

Yes there is. The Fourteenth Amendment clearly states:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.

[logicallee]

Of course they can be dismissed. What you're not getting is that these people have to pay full taxes in the place they're actually living. A place you're not living has no business collecting further taxes from you.

[martey]

> What you're not getting is that these people have to pay full taxes in the place they're actually living.

In that case, they can claim a "Foreign Earned Income Exclusion" [1] which reduces or eliminates their American tax liability for up to $97,600 of income that they are "paying full taxes" on.

> A place you're not living has no business collecting further taxes from you.

As other comments have noted, just because you are not living in the United States does not mean that you are not materially benefiting from citizenship. Despite living abroad, you can still vote, travel to and from the United States, and take advantage of US diplomatic representation in case of arrest.

[1]: http://www.irs.gov/Individuals/International-Taxpayers/Forei...

[auctiontheory]

As has already been stated many, many times, for most Americans living abroad who are not super-rich, the issue isn't the taxation - it's the complexity (and associated penalties) of the reporting requirements.

Basically, the US government's attitude toward Americans living outside the US, much like the US attitude toward non-Americans wherever they live, is "F* You."

Perhaps you think that this attitude is somehow justified. As a US citizen myself, I think that it is detrimental to long-term US interests.

[martey]

> Perhaps you think that this attitude is somehow justified.

I think it is a complex issue, and should not be dismissed as "not making any sense" or the government wanting to screw citizens living abroad over. As I have already stated, it is clear that the purpose behind the legislation is to prevent unreported income from being stored in foreign bank accounts.

Like with many complex issues, I think the current solution is imperfect and could be improved. Stating that it is stupid is not constructive.

[auctiontheory]

I didn't say it was "stupid" - don't put words in my mouth. And I completely understand the bureaucratic purpose behind it.

The reality is that the truly rich (like Mitt Romney) have plenty of legal ways to shield their income, offshore or otherwise. So these regulations screw (the vast majority of) Americans aboard with relatively modest incomes, while they are ineffectual against the rich few with tax accountants on their permanent staff.

tl;dr - these rules create more harm than benefit.

[halostatue]

I’ve seen this said several times—the right way to say it is that the U.S. and Eritrea are the only countries that tax non-resident citizens’ income regardless of the source of that income. There are often tax treaties in place with Western countries that reduce that value to zero based on taxes paid to the country of residence.

Canada will tax non-resident citizens if they have certain ties to Canada (http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html), but only on income generated in Canada.