[reuven]

Many countries (including Israel, where I live) have tax treaties with the US. You still need to file US taxes every year, but any money you pay toward your country of residence counts toward your American taxes, up to a certain ceiling.

The fact that US income tax is lower than those in most other countries means that such people will almost never paying any actual tax -- and, believe it or not, are even entitled to a tax refund from the US government.

So yes, it's a pain that the US makes me file tax forms every year. Or more realistically, the US makes me pay an accountant to handle this for me. But the odds of my having to pay income tax to the US are pretty slim, until/unless I'm making a ton of money, in which case I'm sure that my accountant will think of new clever ways to avoid doing so.

[deciplex]

> The fact that US income tax is lower than those in most other countries means that such people will almost never paying any actual tax -- and, believe it or not, are even entitled to a tax refund from the US government.

After you exhaust the foreign-earned income credit (which is roughly 90K), you're basically paying the higher of US and local tax. And it's not always lower e.g. Americans in Hong Kong will end up paying tax.

I've never heard of anyone getting a refund from this.

[airza]

The netherlands at least has a "highly skilled migrant" system wherein you are refunded a chunk of your dutch taxes. This results in paying a similar amount to the US.

[happyraul]

> believe it or not, are even entitled to a tax refund from the US government.

From the IRS website:

> Your foreign tax credit cannot be more than your total U.S. tax liability multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources.

So no, one is not entitled to a tax refund, because the credit cannot be more than the total U.S. tax liability.

[davidw]

> The fact that US income tax is lower than those in most other countries means that such people will almost never paying any actual tax

Not to the US, at least, but to the other country, yes. So going abroad is not a way to save money on taxes.