According to U.S. law, American's incomes worldwide are subject to income tax, regardless of place of residence. Currently, a number of laws reduce or eliminate tax liability for many expats.
For 2012, the total Foreign Income Exclusion is $95,000, however, an expatriate living in Europe is at this limit with a salary of only €70,000, and with potential tax rates of 50% and high costs of living, they are hardly wealthy.
The Foreign Income Exclusion should be raised to upper limit of $250,000, so that the law only targets extreme tax avoidance methods instead of simple expatriates trying to get by. Alternatively, a more accurate system for taking costs of living and foreign tax rates should be enacted.