Professor Frank Barry:

Yes, that is right. It is not necessarily just a function of the paralysis of the US tax system that I have talked about - it is that this whole interlocking, overlapping jurisdictional regime can have very unusual consequences that are not apparent at first glance. For example, when profits are ultimately repatriated, the US Treasury benefits more from profits that are repatriated from a tax haven than profits that are repatriated from Japan, for example. That is because one has to pay taxes on the profits when they are repatriated but one gets a tax credit for taxes paid abroad. Therefore, if a subsidiary is operating in Japan it pays a high tax, so it owes no tax to the US tax authorities when those profits are repatriated. When one repatriates profits out of Ireland one gets a tax credit for the Irish taxes paid, but lots more is owed to the US tax authorities. In that sense therefore, if the profits are ultimately repatriated, the US tax authorities benefit more from profits located in tax havens - to use the term loosely - than they do from profits generated in high-tax regimes. There are many unanticipated consequences in all of this.