Having almost 40 years experience working abroad (in quite a few different countries along the way) for an American company, I can tell you that you are waaay off the mark with your sunny assessment.
Where do you come up with a $200k income exclusion? IN truth, a US couple is exempted on only the first approximately $91,500, plus (under certain circumstances) a modest housing allowance.
BUT, you must be aware that the US government considers many elements of employer deployment cost to be income to the employee. For example, if you get a trip home annually paid by the company, that’s income. If you have to have your kids in an english language school because they can’t speak the local language or because they aren’t legally eligible to attend local government schools, and the company picks up the tuition (usually about $10,000 to $15,000 per year per kid) that’s income. The list goes on. In the last 10 years of working abroad, I never had ANY part of the exclusion actually applied against real, disposable income. It was all used up on employer costs of deployment, attributable to me as income by the IRS, but not available to me to save or spend.
And, here is another error: You NEVER see sunset on these taxes, not after “several years”: not EVER.
It is true, as you say, that at least to some extent “the tax liability is factored into your salary by the company your work for”. But, you have to know, that since Brits and Aussies, just to name two nationalities among many, don’t require as much to be factored in because their countries don’t hound them for taxes, they are MUCH cheaper to hire and deploy. The benefits that Americans can expect from their employers have steadily declined for years.
Competition, you see.
And a few years ago, when US tax laws were changed to take the income exclusion off the bottom rather than the top, Americans became about $10,000 a year even more expensive as compared to other nationalities.
In my company, that US tax law change became known as the Australian Full Employment Act as American after American was replaced by Australian new hires.