The U.S. Treasury Department has just published a tax policy white paper which amounts to a lawyer’s brief defending the brazen abuses of tax administrative processes clandestinely orchestrated by U.S. firms in cahoots with a handful of European countries. It’s August, and nearly the end of the Administration’s term to boot, so in the ordinary course even tax professionals could be forgiven for ignoring the white paper. But this is not simply another tedious tax policy exercise.

Simply put, “business friendly” jurisdictions (like Luxembourg) in substance offered through secret private deals to provide U.S. multinationals with tax shields in the form of their laws and European tax treaties, in return for what in substance were modest fees from the multinationals. All of this was revealed principally by the LuxLeaks scandal. I have worked in the area for 30 years, and I was awestruck by the sleaziness of the operations that came to light.

Most observers – including Treasury itself, the Organization of Economic Cooperation and Development, and many tax law academics and tax economists – agree multinationals in general, and U.S. multinationals in particular, are grandmasters at generating what I call “stateless income” – income that is stripped from the country with which it has the closest economic relationship (for example, the country where a firm’s consumers are located) and deposited in a congenial low-tax jurisdiction, like Ireland. This is how U.S. firms have come to hold over $2 trillion in very low taxed offshore earnings, much of it in cash.

European countries have been particularly hard hit by these tax depredations, in part because they are not in complete control of their own tax systems. The European Union’s rules mandate that member states show deference to other member states in respect of important tax jurisdiction matters. That system never contemplated a world in which some enterprising member states would facilitate multinationals’ skimming of tax revenues from other member states.

The European Commission has no direct authority to intervene in domestic member state tax matters. But the European Commission does have the authority to shut down illegal “state aid” – subsidies of one kind or another granted by a member state and meant to advantage one group of businesses over others. Often the subsidies are obvious, like low-cost government loans to a home country champion, but state aid principles apply in the tax arena as well.

The European Commission has invoked the state aid laws to argue that Luxembourg and other countries entered into these secret tax deals in order systematically to privilege multinational firms over domestic European competitors, by creating (for a fee) artificial arrangements that enabled income to be stripped from other European countries without subjecting the shifted income to tax anywhere. The outcome, according to the European Commission, is an illegal tilting of the playing field, just like a subsidy to one favored company.

As the Treasury white paper points out, the EC’s arguments are novel, and further are being applied retroactively. But Europe follows the rule of law, and the EC’s arguments ultimately will be tested in court. Treasury and the IRS also develop novel legal arguments all the time, and apply those to taxpayers’ past years that are still under audit, but Treasury has never reproached itself for allowing its thinking to evolve, or for applying that new thinking retroactively. The large companies that Treasury is protecting are all capable of defending themselves in European legal proceedings, and are almost all under sustained IRS audit attack for applying the same tactics to erode U.S. tax revenues. Particularly here, where the deals themselves were secret, it is galling for the United States to argue that the EC has gotten involved too late in the game to be permitted to enforce its own laws in its own jurisdiction.

To date European countries rather than the United States have borne the tax revenue costs of the tax strategies covered by the whitepaper. Treasury’s brief thus signals to the world that the United States tolerates stateless income tax planning practiced against others. But Treasury has no business championing the cause of multinational tax avoiders, whether it is the United States or our European counterparts whose oxen are being gored.

Treasury’s deeper reason for championing U.S. multinationals here relates not to the empathy they elicit, but to how state aid precepts intersect with corporate tax law. The EC brings a state aid case against a country (say, Ireland), not a company (Apple). But the country in turn is obligated to claw back the illegal state aid from the corporate beneficiary. Treasury’s concern is that if Apple or other affected firms are required to disgorge to Ireland or Luxembourg the taxes they should have paid, but didn’t, then those firms will turn around and claim those disgorgements as foreign tax payments that reduce their U.S. tax bills.

Treasury sees U.S. firms holding a $2 trillion pot of very low-taxed offshore income and hopes to engineer an end game in which, as part of corporate tax reform, the United States is first in line to collect tax on that amount. But if those earnings had properly been reported in the first instance to the countries to which the income was most closely tied, U.S. firms would have paid foreign tax to Germany, France, and so on, and the United States would have ceded primary taxing authority to those countries. Treasury now is mustering the same sort of mock hurt feelings and outrage that U.S. companies display every time Treasury promulgates new tax regulations, this time in an effort to scare off the EC and European countries from collecting tax that should have been theirs in the first place.

Kleinbard is an internationally recognized tax scholar, professor at USC Gould School of Law in Los Angeles, and author of We Are Better Than This: How Government Should Spend Our Money. Follow him and more USC Gould School of Law professors @USCGouldLaw

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