If you earn your income outside of the U.S, for example, if you are a consultant and decide that you want to not be paid onshore in U.S. dollars but offshore in another domicile then there are quite a number of ways to avoid U.S. income tax and still remain a U.S. citizen - especially if you reside offshore and rarely appear in the states. The WSJ and NYT outlined some of the evasion tactics in articles over time, and the U.S. government keeps trying to close loopholes.
If you're poor, the rule simply doesn't apply. No, I meant if you're net worth is greater than $1 Million. You can easily get around it with some planning.
You're missing the overall point. As the United States becomes more tax hungry, more and more people will investigate the various ways there are to hiding wealth from taxation - legal or otherwise. When taxes are reasonable, the risk of doing something you shouldn't and/or the effort in doing something you can, but requires lots of work/planning doesn't pay off. When you raise that bar, people begin to re-examine what is worth the effort and risk.
I thought it was 2 million, but, do tell, brother Tao, basically, how is this done? Give me a vague idea how you would be able to escape the long arm of the IRS. I think you would be taking some pretty huge risks.
I'm not going to get into everything I know on this forum (and there is probably twice as much I don't know) but it involves setting up corporations in another country, and/or using dual citizenship and foreign currency transactions. All of this done significantly in advance of renouncing citizenship.
Knowledge is power. Most of this stuff is done via IRS code itself, so there's no luck needed. Just an accountant who understands how to do it. This is one of the reasons why raising taxes won't do all that much to the rich unless you close loopholes first.
Hmm I wouldn't be too sure about that even with a 2nd passport. If that 2nd passport names your place of birth in it you are still screwed. KYC & FACTA requirements placed on banks and brokerages will still cause you headaches just like as if you never had the 2nd passport. Now if that 2nd passport does not name your place of birth If anybody knows speak up, because I'm interested.