This is somewhat misleading, especially the "30% of your wealth bit". What the expatriation tax does is tax you as if you had sold all your property for cash on the day you renounce your citizenship, though it does apply a $600k+ exclusion to the proceeds of the "sale".
Put another way, it's the US saying "you don't get to accumulate wealth in the US and then leave without paying taxes on it." It's not great (I'm an expat, so if I ever considered relinquishing my citizenship, it might affect me), but it's certainly not as terrible as you made it sound.
That said, it is pretty annoying that the US taxes you on worldwide income, independent of residence. And a lot of people who give up their citizenship do so because that plus the enforcement regimes imposed by the US on foreign banks mean that it's very hard to actually live abroad as a US citizen.
You're right that it is more complicated. I had to refresh my understanding.
Apparently, the income requirement rises with inflation and the last number the IRS states is 160k. The 2 million net worth does not appear to rise with inflation. Leaving the US with these amounts creates the assumption of expatriation being for tax avoidance in the US.
With respect to your comment, though, all holdings are deemed as sold for the purpose of taxation at a market value so you do have to pay a very large lump sum on the date of expatriation if I understand correctly. This would be a pretty significant tax though you're right that what I stated above about expatriation was not complete.
I've also been an expatriate for a number of years. Owning a company in another country without being double taxed is nearly impossible as an American citizen with new rules pertaining to foreign-owned businesses. It ended up being a lot less hassle for my finances to simply move back to the US so here I am trying to plan my permanent escape. All the information is clear as mud.
It's also my understanding that getting a visa to come back to the US to visit family after renouncing your citizenship is difficult. It's like being excommunicated from a fanatical religious organization.
Put another way, it's the US saying "you don't get to accumulate wealth in the US and then leave without paying taxes on it." It's not great (I'm an expat, so if I ever considered relinquishing my citizenship, it might affect me), but it's certainly not as terrible as you made it sound.
That said, it is pretty annoying that the US taxes you on worldwide income, independent of residence. And a lot of people who give up their citizenship do so because that plus the enforcement regimes imposed by the US on foreign banks mean that it's very hard to actually live abroad as a US citizen.