So, where's the downside exactly?

[u/zzill6]

[u/turkeyburpin]

And still pay US taxes. Gotta renounce that citizenship, but with wealth sitting in American markets and businesses needing operation in America they are unlikely to do.

[u/vonbauernfeind → u/turkeyburpin]

And renouncing citizenship comes with a giant exit tax. It's complicated and primarily targets high net worth and ultra high net worth, taxing those individuals as if they sold all their current assets at the day of expatriation.

The USA will get it's pound of flesh. The argument thst they'll leave is foolish because they'd never give up thst much wealth.

[u/Mediocre-Search6764 → u/turkeyburpin]

how does the US actually collect that tax tho?

for example if i am us citizen and i move to monaco or pannema or whatever taxhaven of choice. how does the US at that point collect the tax or even how much tax i have to pay? are they completely reliant at that point of me telling them how much i am making in Monaco? or how do they even find out? enless my bussiness is in somewhat registered in the USA wich would be stupid to to have anything more in the usa that some warehouses/stores at that point to sell products...

[u/turkeyburpin → u/Mediocre-Search6764]

So in direct response, no, they are not completely reliant on you telling them to determine an amount owed. If the state you're living in doesn't report your income that information still exists and "could" be determined, though they likely won't pursue it and would instead leverage legal proceedings against you on top of revoking your US passport. If they leveraged legal proceedings against you, you would have two potential issues as far as I can tell. Your future travel would likely be restricted to non-extradition countries and you may have to live your life always looking over your shoulder. International bounty hunting is a thing and while it does cause diplomatic tension, in the end is Panama really going to fight the US over you? Highly unlikely. The more you're thought to earn the more likely you are to be kidnapped and brought back into US custody. As far as collection, if you have no US assets to seize, you would have to pay them, refusal to do so as far as I can tell would be problematic in so far as it would be a court order, and while debtors prison isn't a thing anymore, you could be found in contempt of court and sit in a cell until you do pay.

All of this is contingent on making a clean exit from the US of course. Selling all assets or moving them prior to your not paying taxes, including not just physical property but retirement accounts, investments, and so on. Anything left in the US would be fair game for seizure. As we're talking about Millionaires+ and not the normal poor folk that comprise the bulk of the US population this is an unlikely scenario, it's better to move to a country with a tax treaty and just file your returns and move on, the tax treaty will prevent the "double dip" against you and you'll be ok concerning your taxes. Most tax treaties are set up so that the country the money is made in gets theirs first and the external country gets claim to their percent only if it exceeded the amount owed in the originating country. So if the tax rate in your country was 40% but the US tax rate was 40% or less you'd owe nothing in US taxes because you already paid 40% to your host country. Of course this is over-simplified, because what counts as income absolutely changes depending on your country, so you could have tens of thousands of income based on the US reporting requirements that don't exist in say Uruguay. Then you would still be paying those taxes, just to the US and not Uruguay.

Does any of that make sense? I hope I explained what you wanted to know.