One of my friends in New York City has not been working for decades. His whole family(over 10 people) live by collecting rents at Hong Kong and Queens. Few years ago, they were considering giving up the US citizenships for taxes purposes. They finally decided against it. I think I know the reason now.
The only way many of my land developer friends live virtually tax free is to keep properties fully financed and live of off their net worth as loans are not taxed. Then they just take an interest expense deduction.
The 30% withholding applies to non-resident aliens from countries which do not have a tax treaty with the US. For countries with treaties, the treaties themselves have different specifications for the tax liabilities on different types of income. You can locate tax treaties from the IRS website and download them. Of most interest to traders, there are several countries whose nationals will get zero US-side liability for capital gains from investment/trading in stocks. In theory, the broker will send a statement to tax authorities of the foreign country in question, or the trader will 'honestly' claim the income. In reality, many places do not have anything set up to deal with this effectively, others have a cap gains rate quite a bit lower than the states. The non-resident alien trader will have to apply for a US Taxpayer Identification Number in order to open the brokerage account a file the W-8 BEN to get exemption from the 30% withholding. I have looked into this extensively as there is obviously potential for an edge here... P.S. The benefit to the US of doing this is that those tax treaty countries extend likewise breaks to US people and companies working in their economies.