US citizens can still vote absentee while abroad, so no, not the same thing.
Almost nobody pays this. Moreover, it's not ridiculous that if you're a tycoon traveling the world and you're implicitly using US citizenship as your escape card, you should pay taxes.
Anyone who has lived abroad knows most countries don't want to jail/detain other country nationals.
Do you have statistics to back this bold claim?
There is an additional problem in the form of FBAR/FATCA requirements, which impose a huge burden on taxpayers abroad. Ever tried to report the exact max amounts and interest in all of your accounts? It's not fun, it takes a lot of time and effort, and it costs money.
Not only this but it's difficult to open accounts abroad as an American because foreign banks really don't want to deal with filing all of this paperwork for the IRS.
You've got a biased view here. This is not a tycoon level of earnings. That's a standard citizen who moved abroad and works as a (senior) software engineer.
Has anyone personally had to pay taxes to the US while living abroad? Not talking about a stock sale or business sale. Talking about making income abroad and owning the US for it. I don’t want to hear about your friend of a friend, you personally.
I’ve known people living in places like Costa Rica, China, and all over Europe. No one had to pay a cent ever.
There is the direct financial cost of paying US taxes when living abroad, but it is also a significant cost in time and energy to file taxes for 2 countries. It can get pretty complex, so many need to hire a tax service to handle it properly.
Then there are the additional reporting requirements for any banks that you have accounts with, so some banks will not allow you to have an account with them because you are a US citizen.
The point is that there are some real downsides to maintaining US citizenship when living overseas.
There are many upsides of course, like being able to return to the US at any time and live and work there. If there were an emergency situation, I could probably count on the US embassy to help me evacuate if necessary.
Overall, it's a cost/benefit evaluation. If you have citizenship in another advantageous country (or country in a powerful union like the EU) and significant resources, I can see why it would be tempting for some to drop the US citizenship.
[1] https://www.irs.gov/individuals/international-taxpayers/figu...
[0] https://en.wikipedia.org/wiki/Reed_Amendment_(immigration)?w...
Yes the US will help get you out when you need to. Hostage rescue by special forces in Nigeria[1]. State Department Wuhan evacuation in Jan 2020[2]. 100,000 people evacuated by State Department as of June 2020.[3]
[1] https://www.militarytimes.com/news/your-military/2020/10/31/...
[2] https://www.state.gov/the-untold-coronavirus-story
[3] https://washdiplomat.com/as-coronavirus-spread-state-departm...
> How much taxes do you pay to the US?
Anecdata won't get us very far in understanding.
The point is there are plenty (no idea the exact number) of US citizens abroad that pay taxes. If you're making much over ~$110K and don't have significant deductions, you are paying US taxes. As you can imagine these people are typically experienced technical engineers, executives, business owners, etc. True, most US citizens abroad won't go over the ~$110K, but many do.
Either way, you still have the burden of filing taxes in the complex US tax system which is a non-trivial cost in time and resources - in addition to filing taxes in your host country. Is it worth it? Yes, for most, but simplifying the overly complex tax requirements would make it a lot less burdensome for all US citizens at home and abroad.
Yes, I'm living in Iceland at the moment and paying income taxes in the US.
Iceland has a teleworker visa that lets you live here tax-free while working remotely for your current employer. That's a fantastic deal for most countries, but I'm not saving any money while we're here. (We're not doing it to save money, just doing it to social distance and enjoy the scenery.)
I revoked my citizenship 2 years ago, after going through a stock sale here in Canada.
The process:
- cost me around $20,000 for the lawyer, accountants (had to go back and do 5-6 years of taxes), another $3,000 (I think?) to the US for the revocation process
- had to go to the Bahamas in order to get an appointment at an embassy, I never got a response from the ones here (this was the best part, nice little vacation during Canadian winter xD)
- cost more tens of thousands in Canadian tax as I couldn’t claim all of my tax deductions in Canada for the year of the sale of it would’ve pushed me over 25,000 owing on the US side and meant I’d have had to pay (there’s a program for clearing up to 25,000 owing taxes when you revoke now)
- the IRS fucked up and came back to me this year as owing so I’m continuing to pay the accountants to deal with that for me
- caused untold amounts of stress for myself and my wife
I had previously basically ignored the whole situation as it seemed entirely ridiculous that I should have to deal with this, however the US has started forcing foreign banks to ask their customers about their citizenship status. It didn’t seem smart to lie about this to my bank (who also happens to be my wife’s employer), so it seemed like I may have been ending up on the IRS radar at some point regardless.
All in all an entirely SHIT situation even though technically I probably never would’ve owed outside of your caveats about a stock sale. Had I been compliant it would’ve cost me in money and time each year.
We were concerned that my kids would also potentially be US citizens but it seems like I would have to have lived there for some amount of time for that to kick in.
It's a minor inconvenience for me, but that's because we pay an accountant to handle a relatively complicated tax picture already.