In 2004, intense corporate lobbying persuaded Congress to pass what was called the American Jobs Creation Act. A section of that bill, called the Homeland Investment Act, said that, for one time only, companies could bring the money home and pay only a 5.25 percent tax rate. Companies promised they would use the cash to invest in research and development, build plants and hire Americans. There were safeguards that were supposed to keep the money from being used to pay dividends.

The safeguards did not work. On average, one study reported, companies that brought back money used 60 percent or more of the cash to increase dividends or buy back stock. What they did not do was use the money to hire people or invest in the United States.

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But a precedent was established. Companies concluded that it was foolish to bring money home and pay the normal tax rate. Lobbying had produced a tax break once, and perhaps it could do so again.

A lobbying campaign for a similar break failed last year.

“Congress did not enjoy the sensation of being misled and abused,” Mr. Kleinbard said.

As the cash built up on balance sheets, earning low returns under current interest rates, shareholders looked at it enviously. They wanted to gain access to it without the company having to pay taxes.

One way to do that is called an inversion, in which an American company buys a foreign one but structures the deal so that the headquarters of the new company is overseas in a country with a lower tax rate.

The company may still be owned by the same investors and run by the same managers working in the United States. But there are ways to transfer the money to the “new” parent without paying taxes.

Inversions have been around for years, and in fact were restricted by that 2004 tax act, which required that the foreign company being acquired be at least a quarter as large as the American one. That limitation meant United States companies had to at least merge with a real company rather than set up a foreign shell company, as some had been doing.

This week, the Obama administration announced new regulations to toughen the way that computation is made and to make it harder for an inverted company to gain tax-free access to its overseas cash. It said it was also working on regulations to limit what is called “domestic earnings stripping,” a way to move taxable profits from the United States company to a foreign affiliate.

The regulations will most likely have some effect, but it would take legislation to really reduce the abuse. A senior Treasury Department official said he hoped Congress might act in the lame-duck session after the November election, but don’t hold your breath.

As it is, the system is absurd. A company can exploit the fiction that its overseas subsidiary is a different company and sign contracts to move profits wherever it wishes.