The only “way” to really avoid it is renouncing the American passport (if they are a naturalized citizen of the country they have moved to first). Like this: the individual has moved abroad to another country under an US passport at first, but they still owe taxes to the US government despite them not physically being there even though they’re earning a foreign paycheck (until they surrender their passport for another not considering dual citizenship).
Why don’t digital nomads consider naturalization rather than living under a Golden Visa? I know that Portugal or Spain for instance is popular towards digital nomads, but should they renounce their American passport into becoming a Spanish or Portuguese citizen? Also, why don’t Western expats living in Dubai consider Emirati citizenship (they do not recognize dual citizenship, though) if they consider the UAE their new home?
American living abroad here. I have lived and worked here for 5 years. Not once have I paid taxes to the USA. I have to file my taxes every year, but since my wife and I do not make more than $260,000 combined, we do not have to pay taxes to the US government. There are even more tax credits we get by living in a country with a tax treaty with the USA (foreign tax credit).
Why don’t Americans living abroad renounce their citizenship? Many reasons. First, most Americans living abroad probably have family in the USA. Giving up their citizenship would mean having a more difficult time crossing borders into the USA. They would also be giving up the ability to move back to the US if they wanted to. They would give up their ability to vote in US elections, which may be important to them if they have family there. Additionally, until recently, it cost like $2500 to renounce an American citizenship. I think it now costs like $800. It also takes months to get approval from the state department.
So if you don’t make a whole lot of money, why would you want to give up citizenship? Renouncing your citizenship really only has negatives unless you make a lot of money.
Also, to address why they don’t consider naturalization. Many probably do consider it. But it takes a lot of time, effort and money to become naturalized in most countries. Right now I’ve been here for 5 years and I will only become eligible for naturalization at the end of this year. After applying, it will probably take another year, lots of paperwork and money to become a citizen.