Over the past 40 years, some of the nation’s biggest and most profitable companies have not only moved American jobs and manufacturing overseas, but by taking advantage of a U.S. tax code that encourages companies to shift their income overseas, they have cut the taxes they owe by more than half.

The result, writes Jia Lynn Yang in The Washington Post , “is lower revenue here that could pay for infrastructure, education and other services that support domestic growth—and that make life easier for U.S. firms.”

Yang and the Post analyzed data from the past 40 years on the 30 firms that make up the Dow Jones industrial average and found that the U.S. mega-multinational corporations:      

[H]ave seen a dramatically smaller percentage of their profits go to U.S. coffers over time, even as their share prices have driven the Dow to an all-time high .

The reason, Yang writes, is not just some loopholes tucked deep in the tax code. “It’s far bigger.”

Companies now have an unprecedented ability to move their capital around the world, and the corporate tax code has not kept up with the changes. Just the opposite, in fact. Experts say the U.S. code has encouraged companies to shift their income overseas….Many firms, in turn, have discovered that just as they can move their manufacturing to other parts of the world, so, too, can they shift their income to far-flung tax havens such as the Cayman Islands.

A report from Citizens for Tax Justice earlier this year showed just how widespread is such corporate tax avoidance .

In 2008, American multinational companies reported earning 43% of their $940 billion in overseas profits in the five little tax-haven countries, even though only four percent of their foreign workforce and seven percent of their foreign investments were in these countries.  

Yang writes that in theory, corporate profits earned abroad are subject to the same U.S. tax rate, but any dollar earned abroad does not get taxed by the U.S. government until it flows back to the parent company. A J.P. Morgan report estimates that $1.7 trillion in foreign earnings is being held overseas by more than 1,000 U.S. firms, yet to be taxed by the federal government.

Meanwhile, back in Washington, hundreds of  corporate lobbyists are pushing for even lower corporate tax rates  or for elimination of all taxes on overseas corporate income, which would make the problem worse.  

These proposals raise the question of whether the interests of multinational corporations are fundamentally different from the interests of America's workers. As Yang points out, “the interests of U.S. multinationals appear less neatly tethered to the interests of this country.”

“When you get U.S. businesses coming to Washington and talking about ‘We need to do this and that for the U.S. economy,’ what does that even mean?” said Doug Shackelford, a professor of taxes at the University of North Caro­lina’s Kenan-Flagler Business School. “Who are they referring to? Is it U.S. workers? Is it U.S. shareholders?”

The AFL-CIO is urging Congress to eliminate the tax benefit of sending jobs overseas and shifting income to tax havens. The way to do that is to tax overseas corporate income the same as domestic corporate income, which would generate $583 billion over 10 years. This money could be used to invest in infrastructure, clean energy and education to put America back to work.