Yes, I pay taxes living abroad. Any US citizen overseas that earns over $107,600 in 2020 (changes slightly every year) may be liable to pay US taxes (depending on what other deduction they may have, etc)[1].
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.
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]
> I’ve known people living in places like Costa Rica, China, and all over Europe. No one had to pay a cent ever.
> 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.
Except dropping your us citizenship may prevent you from ever stepping foot in the US again, if things like the SAFER Act [0] were to actually pass. Additionally, renouncing puts your name in criminal databases, and probably has lots of other downsides compared to someone that just never had citizenship in the first place. Not to mention all the accidental Americans that never stepped foot in the US!
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...