Here is why Citizenship Based Taxation is wrong and why the foreign earned income exclusion / tax credit do not work:
In an attempt to mitigate some
of the most egregious effects of double taxation, the US has introduced some credits for taxes paid abroad. But, unfortunately, the US carefully avoids giving tax credits or deductions for the full economic impact of
taxes paid abroad. The Alternative Minimum Tax can also create a tax liablity for income that was earned outside of US jurisdiction and was already taxed by local government!
Double taxation can take place
in every event where a foreign country taxes income in a manner unlike that used in the United States.
One example makes this clear. Most European countries collect far more revenue from individuals by
indirect value added taxes than through direct taxation of income. The US Government disallows all credit for such indirect taxation because there is no equivalent federal value-added tax in the United States. The
economic reality that, the income has been heavily taxed once, and is liable to be taxed a second time by the United States