[ikka]

But the US taxes foreign income.

Only if you are making more than $85K per year (I think that is the current limit). You can live pretty well for even $24K per year in some countries.

[Paleo Conservative]

But lots of entrepeneurs make a lot more than $85K per year.

[PA Engineer]

The 85K FWE does not include SS. These workers earn more overseas and generally still pay the same gross amount in taxes. The exemption was strictly to make American workers more competitive and has not been indexed to inflation since the early 80s because of rat opposition. This generally means that money is flowing back to the US in both investment and taxes rather than leaving in the form of cheap imports.