I’m aware there’s no real way to say anything here without sounding like a pretentious snob, but those income limits aren’t exactly spectacularly high.

I work in tech in NYC and my income is around those limits. My boyfriend is from Switzerland and there’s a non-trivial chance that we’ll wind up there long-term. If I was from literally any other country in the world beyond Eritrea, I would file Swiss taxes and that would be that. Instead, I’ll have a direct financial incentive to give up my native citizenship because I’m from one of two countries that makes a claim to any income earned anywhere in the world, even if I don’t step foot in the country that year. This is particularly rough in Switzerland because average salaries there are quite high, and thus so are costs of living, and so surpassing those limits isn’t a particularly uncommon thing. (Edit: About one in four Swiss residents make more than $120,000 annually).

I know this won’t garner any sympathy at all, but a bad policy only affecting the relatively wealthy doesn’t change the fact that it’s a bad policy. It could even backfire from a financial perspective, since having renounced American citizenship, I’d be less inclined to spend time in the US and contribute to taxes while visiting, and I’d never move back long-term, cutting off a chance of the government getting full income taxes from me ever again, whereas a change of circumstances might have otherwise prompted me to eventually return to the US.

Making $120k a year is by no means on the wealthy scale.

I pay no tax to the US, but I bitch about it. I’ve lived abroad since I was 3y.o and realized when I turned 18 that I have to declare to the IRS every year. Let me tell you, it is an absolute pain in the ass when you have to do it yourself, without a US bank account or phone number. Takes me a full working day to declare 0 tax to the IRS when they already know that I owe zero tax because they force any bank I have accounts at to report to them. Half the banks in Sweden simply refuse to have me as a customer because of this, in addition to certain types of income technically being subject to double taxation because of US law.

I can’t even get rid of my US citizenship without paying an absurd exit tax

$120k is “wealthy” now? 120k isn’t even enough to buy a fucking house in most cities in the US. Actual wealthy people aren’t affected by this law because they don’t have regular income.

They pay, because at any moment they can come back as a citizen.

But that’s true of pretty much every other country in the world as well. So it still doesn’t explain why the US is the only one that charges tax on foreign-earned income.

You seem unaware of the population of accidental Americans. When a Dutch couple gives birth on US soil before returning to Europe, that child automatically a birthright citizen of the US. They can grow up having never set foot in the US (apart from birth), and for the rest of their life they have a legal obligation to file US tax and declare to the US all their Dutch income & bank accounts even if they are below that $120,000 line. They also get targeted for discrimination along with all other Americans by banks who don’t accept Americans (even if they are also Dutch). They have to pay a US accountant upwards of $300/year for the rest of their life just to file that zero.

It’s also worth noting that an income of $120k goes much further in the US than it does in Europe (where they might be living).

So obviously a lot of accidental Americans have become motivated to renounce. But if they already own a home, you can see the problem. I would not say owning a home makes someone “rich”. They still need to work to eat and to maintain the home.

You think Americans do t pay property tax?

This is not the same thing as an exit tax.

For example, two people each own identical houses. One lives in the US and one lives outside. Both decide to keep it until they die. They both owe property taxes. If the person living outside of the US renounces their citizenship, they owe an exit tax even though they did not sell the property. The value of the house didn’t change. It’s location, owner, property tax obligation… Nothing changed.

There is nothing wrong with this. It should just be applied equally. If there is going to be a wealth tax, I want it applied to wealthy Americans even if they don’t renounce their citizenship.

You think Americans do t pay property tax?

That tax is irrelevant. That just muddies the waters to bring up property tax because every real estate property is subject to local property tax. It’s a wash. When you buy a house, you implicitly agree to property tax wherever that house is located.

Yes that makes sense now, thank you!

I have a few weird questions if you have time to answer them. How does it work in the case where the person was outside of the USA at the time, seeing as they were not on USA “soil” at the time? It’s just that one of the parties (in this case the federal government) has to be on USA soil?

And how does that work if, say, you’re standing on the USA side of the Mexican border and you throw a brick at someone on the Mexican side? Could the Mexican citizen in this case file a lawsuit in a USA court?

You say inhabitants but it’s clear from the article that at least some of the litigants were not inhabiting USA territory. And I thought the entire point of setting up Guantanamo Bay was that it “technically” wasn’t US soil therefore they are not afforded the same protections.

Except you’re comparing LEGAL SYSTEMS with ORDERING FOOD

They aren’t comparable.

I’m almost positive I could navigate ordering food from almost anywhere in the world, as long as I could speak their language.

But I don’t for a second think I could navigate their legal system, and in quite a few cases from my understanding, I wouldn’t be able to do anything at all as a foreigner.

Sure, it MIGHT be similar enough. But I’m not going to risk it, and I would prefer to at least ask someone with more local knowledge than myself. Probably a lawyer but if it’s only passing curiosity, a simple question on a website will do.

Thereby handily ignoring the rest of my comment, because you’d prefer to think of anyone who wants to renounce citizenship as a rich tax evader, rather than admit that there are plenty of reasons why someone might not want to have American citizenship, because shock horror not everyone wants to be American, live in the US, or loves the US. Especially if they’ve never lived there or visited.

Imagine having been born in Italy during a long holiday, and for the rest of your life being forced to fill in Italian tax forms, despite working a minimum wage job and having no idea how the Italian system works and barely speaking the language. And when you try to get a loan from a American bank, they say no, because they’d have to file relevant paperwork with the Italian equivalent of the IRS.

But here’s the fun part, you still have to file a tax return every year! Even if you’re well under the threshold! And trying to find someone living abroad who is versed in American expatriate tax law is expensive! And I can’t afford it!!

I am hiding from the IRS and have been for 16+ years.

I’m gonna take a wild guess that your definition of the rich for whom all taxes are good is precisely your income + $1.

Man, if that was true, everyone above the poverty line is rich. I was thinking more “An individual income that is literally over double the median household income where I live”

You can just Google it or ask AI, y’know. Number 2 really stands out, if you’re curious.

The United States is one of the few countries that has a system of taxing its citizens and residents on their worldwide income, including income earned abroad. This practice is known as “citizenship-based taxation.” There are a few reasons why the U.S. follows this approach:

1. Historical Reasons: The United States has had a system of citizenship-based taxation in place for a long time. It dates back to the Civil War era when it was implemented to fund the war effort.

2. Desire to Prevent Tax Evasion: Citizenship-based taxation is intended to prevent U.S. citizens and residents from avoiding taxes by moving their assets or income abroad. Without it, individuals might seek tax havens to reduce their tax liability.

3. Complex Tax Code: The U.S. tax code is complex, and changing to a different system, such as residence-based taxation (taxing only income earned within the country), would require a significant overhaul of tax laws.

4. Revenue Generation: Taxing foreign income allows the U.S. government to generate revenue from its citizens and residents, regardless of where they earn their income.

It’s worth noting that while the U.S. taxes its citizens and residents on foreign income, there are mechanisms in place, such as the Foreign Earned Income Exclusion and foreign tax credits, to mitigate double taxation and reduce the tax burden on income earned in other countries. However, compliance with U.S. tax laws related to foreign income can be complex and may require professional assistance for those living abroad.

I don’t see the problem with reporting the account.