This paper analyzes the role of foreign tax havens in U.S. business and their implications for U.S. and foreign governments. It finds that U.S. corporations report unusually high profit rates in tax havens, and that these jurisdictions account for over a quarter of U.S. foreign investment and nearly a third of U.S. foreign profits. The paper examines the incentives behind this behavior and the effects on tax revenue. It concludes that tax havens may enhance U.S. tax collection by allowing U.S. firms to shift profits to low-tax jurisdictions, thereby reducing their U.S. tax liability. The paper also explores how U.S. firms respond to low tax rates in tax havens, including through debt contracts, transfer pricing, and financial arrangements. It finds that U.S. firms are motivated to locate operations in tax havens due to the tax advantages they offer, and that these activities have significant implications for U.S. tax policy and international tax relations. The paper also highlights the importance of understanding the mechanics of the U.S. international tax system, including the use of foreign tax credits and the deferral of U.S. taxes on foreign earnings. Overall, the paper provides a comprehensive analysis of the role of tax havens in U.S. business and their implications for U.S. tax policy.This paper analyzes the role of foreign tax havens in U.S. business and their implications for U.S. and foreign governments. It finds that U.S. corporations report unusually high profit rates in tax havens, and that these jurisdictions account for over a quarter of U.S. foreign investment and nearly a third of U.S. foreign profits. The paper examines the incentives behind this behavior and the effects on tax revenue. It concludes that tax havens may enhance U.S. tax collection by allowing U.S. firms to shift profits to low-tax jurisdictions, thereby reducing their U.S. tax liability. The paper also explores how U.S. firms respond to low tax rates in tax havens, including through debt contracts, transfer pricing, and financial arrangements. It finds that U.S. firms are motivated to locate operations in tax havens due to the tax advantages they offer, and that these activities have significant implications for U.S. tax policy and international tax relations. The paper also highlights the importance of understanding the mechanics of the U.S. international tax system, including the use of foreign tax credits and the deferral of U.S. taxes on foreign earnings. Overall, the paper provides a comprehensive analysis of the role of tax havens in U.S. business and their implications for U.S. tax policy.