Many multinationals use transfer pricing (the pricing of goods and services sold between affiliates of a parent company) to minimize their global tax rate. After transferring intellectual property to low-tax jurisdictions like Puerto Rico, Ireland and Singapore, companies manipulate licensing and cost-sharing arrangements to avoid or reduce United States taxes. Cash from global operations is then parked offshore until the tax professionals can figure out how to get it home tax-free.Microsoft, for example, now holds more than $50 billion in foreign cash, cash equivalents and short-term investments. Apple holds more than $100 billion in foreign cash and investments — an amount roughly equivalent to the gross domestic product of Vietnam.

As economic theory would predict, corporate managers are willing to accept a lower pretax rate of return and create jobs overseas rather than paying the repatriation tax and create jobs at home.