But aren't corporate taxes higher in the U.S than most developed countries?
It's true that the statutory tax rate—including state and local taxes—is close to 40 percent, the highest among the developed world. But U.S. companies apply a long list of tax credits, subsidies, loopholes and other giveaways, so most of them pay much less than the top rate. Some, according to an analysis by Citizens for Tax Justice, have figured out how to pay no tax at all.
Total corporate federal taxes fell to about 12 percent of profits from U.S.-based activity in 2011, according to a Congressional Budget Office report. In a separate study, the CBO found that the average tax rate in 2011 among developed countries was 3 percent of gross domestic product—compared with 2.3 percent of GDP in the U.S.
Canada, which could become Burger King's new tax home if the deal goes through, just cut its federal corporate tax rate to 15 percent—the lowest of the so-called Group of Seven leading industrial nations, according to the Tax Foundation. Last year, the company reported profit of $234 million—double the year before.
So how much money is Uncle Sam losing from these corporate tax dodgers?
So far this year, fewer than a dozen companies have flipped their corporate tax base upside down, including banana distributor Chiquita Brands International and drug maker AbbVie. But those moves have drawn lots of attention—and prompted other U.S. multinationals with large overseas holdings to consider heading for the corporate tax exit.
Some companies have already stashed assets and accumulated earnings outside the country—hoping that Congress will eventually lower the tax rate and allow them to pay less when they bring that money home. By some estimates, as much as $2 trillion in corporate cash is sitting outside the U.S.—money that could otherwise be reinvested at home to expand domestic operations and create more jobs.
Why doesn't Congress just clean up the corporate tax code?
Corporations have been lobbying Congress for years to lower the corporate tax rate—which would mean paring back a thicket of tax credits, subsidies and complex rules that everyone agrees needs an overhaul. But each of those loopholes has a company or industry lobbying to protect it.
A wave of inversions could make it even harder for Congress to pull off a "revenue neutral" tax reform package. To offset the money lost by lowering the top rate, Congress would have to close loopholes and subsidies. But if more companies dodge the American tax code altogether, those added revenues will be harder to find. The more companies shrink the overall pipe of corporate tax revenues, the harder it will be to make tax reform "pay for itself."
Read More CEOs to Obama: Tax reform, not an inversion Band-Aid
In any case, the tax reform debate has become mired in the ongoing political dysfunction that has already pushed the country near a debt default, temporarily shut down the government and, most recently, exhausted the highway fund that's needed to fix a national pothole epidemic.
Given that track record, it's hard to see how Congress will ever be able to tackle an issue as complex and divisive as tax reform.
So some companies aren't waiting. With inversions, they can have it their way today.