Yes. The United States can substantially reduce offshore corporate tax avoidance—but it requires treating profits as taxable where the real economic activity occurs, not where a corporation rents a mailbox, registers an affiliate, or shifts ownership of patents and loans. Enforcement can raise meaningful revenue, but it cannot by itself erase the national debt; a durable debt plan also needs broader revenue choices and spending reforms.treasury+1
Much of what you describe is legal tax avoidance, not necessarily illegal evasion. A multinational may locate a subsidiary in the Cayman Islands, Ireland, Malta, Delaware, South Dakota, or the City of London, then use royalty payments, internal loans, transfer prices, or intellectual-property ownership to make profit appear there rather than where its workers, customers, sales, factories, and management actually are.congress+1
A mailing address alone should not decide tax residence. The relevant principle is economic substance: where decisions are made, people work, assets are used, risks are managed, and sales are generated. Australia’s anti-avoidance rules explicitly target artificial arrangements designed to avoid having a taxable local presence, and its diverted-profits tax is aimed at contrived offshore profit diversion.ato
Congress could adopt a package like this:
Tax corporations based on real activity. Define taxable presence by substantial sales, employees, management, property, and operations in the United States—not merely formal incorporation or a claimed foreign headquarters.
Tighten transfer-pricing rules. Require firms to show that payments to related offshore affiliates—for patents, trademarks, interest, insurance, or services—reflect genuine market value and real business functions.
Deny deductions for sham payments. If an offshore affiliate has few employees, little equipment, and no meaningful decision-making role, royalty or interest payments to it should not reduce the U.S. tax bill.
Use a country-by-country minimum tax. Tax profits in each low-tax country up to a meaningful minimum rate, rather than letting a company average high-tax and zero-tax jurisdictions together. The OECD’s Pillar Two model uses a 15 percent floor for very large multinational groups, generally those with revenue above €750 million.piie
Adopt a robust “undertaxed profits” rule. If a U.S. company books profit in a tax haven and the haven does not tax it adequately, the United States should collect the difference.
Create an exit tax. When a corporation moves its legal headquarters abroad while its owners, leadership, markets, and operations remain substantially American, levy tax on unrealized gains and prevent the maneuver from erasing its U.S. tax obligations.
Require public country-by-country reporting. Large corporations should disclose, country by country: revenue, profit, taxes accrued and paid, employees, assets, and retained earnings. The EU has moved toward public reporting for large groups, including many U.S.-based companies operating there.forvismazars
Require real beneficial-ownership disclosure. Government agencies and law enforcement need reliable information about the human beings who ultimately own companies, trusts, and shell entities. That makes hidden ownership and laundering of income harder.
Fund the IRS’s large-business and international units. Sophisticated multinational structures require accountants, economists, lawyers, and data systems—not just more audits of ordinary wage earners. IRS investment has been estimated to generate substantially more revenue than it costs.tax.thomsonreuters+1
The objective should not be simply “raise taxes,” but restore equal treatment. A teacher, nurse, small-business owner, or local manufacturer generally cannot move income to an internal Cayman affiliate, so rules that tolerate artificial profit shifting push a disproportionate share of financing government onto people whose income is visible and reported.
A fair design would combine corporate enforcement with:
Corporate tax reform should also address domestic tax havens. Delaware’s corporate-law system and places such as South Dakota can facilitate secrecy or specialized financial structures even if they are not “offshore” in the geographic sense. Federal disclosure and tax rules are therefore necessary; states have incentives to compete for incorporations and financial business.
Other countries offer useful models, though none has eliminated avoidance completely.
There is an important caveat: the global deal has become weaker in practice for U.S.-headquartered companies. Reports in 2025–26 indicate U.S. multinationals received exemptions or safe-harbor treatment from key Pillar Two mechanisms, so U.S. domestic legislation remains crucial rather than relying solely on the OECD process.piie+1
Even aggressive corporate enforcement will not, by itself, “pay off” a debt measured in tens of trillions of dollars. It can nevertheless be an important part of a long-term fiscal settlement because it raises revenue fairly, protects honest domestic businesses, and restores confidence that wealth and corporate scale do not purchase exemption from ordinary obligations.
A credible plan would include:
Close offshore and domestic profit-shifting channels.
Increase IRS capacity focused on complex corporate and high-income compliance.
Restore more progressive taxation of very high incomes, large inheritances, and capital gains where appropriate.
Examine large spending drivers—especially health-care prices, procurement, and tax expenditures—rather than cutting basic services indiscriminately.
Use added revenue first to reduce annual deficits, because debt stops growing only when ongoing revenues and spending are brought into balance.
The core rule is simple: a company should pay tax where it employs people, makes sales, uses public infrastructure, and earns its real profits—not where it has a brass plaque and a lawyer’s address.