"In Defense Of Tax Havens" by Daniel J. Mitchell (Cato Institute: Commentary)

"In Defense Of Tax Havens" by Daniel J. Mitchell (Cato Institute: Commentary): "They argue that if an American firm can earn money in Ireland and only pay 12.5% tax, this gives them an incentive to close down factories in America and ship them overseas.

Since nearly 90% of what American companies produce overseas is sold overseas, according to Commerce Department data, there's not much evidence that this is happening. But there's actually some truth to this argument. If a company can save money by building widgets in Ireland and selling them to the U.S. market, then we shouldn't be surprised that some of them will consider that option.

But this does not mean the president's proposal might save some American jobs. If deferral is eliminated, that may prevent an American company from taking advantage of a profitable opportunity to build a factory in some place like Ireland. But U.S. tax law does not constrain foreign companies operating in foreign countries. So there would be nothing to prevent a Dutch company from taking advantage of that profitable Irish opportunity. And since a foreign-based company can ship goods into the U.S. market under the same rules as a U.S. company's foreign subsidiary, worldwide taxation does not insulate America from overseas competition. It simply means that foreign companies get the business and earn the profits."