The tax loophole actually allows company to separate the income earned in other countries from the US income. A US company is required to pay taxes on worldwide income. If the setup an offshore corporation to receive the foreign income, it won't be taxed in the US until the money is transferred to the US. If companies have foreign manufacturing plants, they will play games with transfer pricing by paying inflated prices for the goods thereby increasing the expenses for the US corp.
@webgrunt Not only an environmental tragedy, but a commentary on that tax loopholes allow companies to incorporate in foreign countries, but operate primarily domestically. This enables the corporation to avoid paying US taxes on profits earned primarily in the US.