From what I know:

So, you have Microsoft, based in the US with operations in other countries as well. Microsoft's Ireland branch sees profits of $1B and pays the Irish government the tax on the profits it generated. Microsoft's US branch sees profits of $5B and pays the US the tax on that $5B. Now, if Microsoft wants to bring that $1B from Ireland back into the US, it must also pay the US government tax on that $1B (it's already paid the Irish government there). But, if they don't bring that money back and rather reinvest it overseas, they don't have to pay tax on that $1B profit made by the Ireland branch. President Obama wants to make them pay tax on that $1B no matter what - so that they have to pay taxes to both the Irish and US governments.

No other country has a system like this. So, if you're a British company and you have an American arm, and you make $5B in British profits and $1B in American profits, you can bring that $1B back to Britain (after paying the US government tax on that $1B) without having to pay the British government tax on it. This is how the world works - as a company, you have to pay tax on the profit you create within a country. Except in the US where you have to pay taxes on the profits you make in the country and any profits you bring back from abroad, but you're allowed to defer the taxes as long as you don't bring the money back.

One of the bad side-effects of this is that it means that American companies would rather reinvest their money overseas than bring it back since they would be doubly taxed if they brought it back. And it's important to note that "socialist" countries in Europe don't see this as "tax dodging" and don't tax companies on foreign profits (probably in the hopes that they bring the money back and reinvest within the country).

So, for companies with overseas operations, this is essentially a 35% increase in taxes on foreign profits (which are already taxed in the foreign jurisdiction at whatever that country's rate is).

I really don't think this is an issue of being pro or anti socialism. I favor better government services, but you can't just doubly tax companies on profits which have already been taxed by another country on profits not created in your country. It would make it impossible to run a multi-national firm from the US.

Does that sound right?

EDIT: There is one caveat here. Right now, companies sometimes fudge where they created the profits. As the article points out, Microsoft develops Windows in the US and then has its Ireland branch sell it in Europe. The Ireland branch shouldn't be getting those Windows copies for free and the Ireland branch (from an accounting perspective) should be paying the American branch a royalty. Microsoft's pre-tax profits would be the same in that case, but where some were realized would be different with more realized in America. And the IRS actually does prosecute cases (they recently settled with another software firm that they accused of this). That's really the problem here is that American firms are attempting to claim that some of their profits are from foreign arms that were actually created in America (since America has one of the highest corporate tax rates in the world - higher than socialist Europe). Anyway, it's late and I should be asleep.

EDIT 2: Personal and Corporate Income Taxes of different countries - http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.sv.... As you see, Ireland has very low corporate taxes and the US is second only to Japan. So Microsoft would rather its Irish branch see much higher profits than its American branch. Personal taxes might not be high in the US, but corporate taxes are.

EDIT 3: Basically, I think it's unreasonable to expect a company to pay taxes both to the country that they're operating in and to the country they're headquartered in on the same profits. Taxes are good, but having to pay twice just means that you can't have companies that cross borders. That said, we should crack down on companies that are mis-categorizing where they profits are being created.

FINAL EDIT: But much of that complexity is caused by the divergence between America’s system of taxing its firms (and citizens) on their worldwide income and the territorial system used by most other countries. http://www.economist.com/world/unitedstates/displaystory.cfm... An Economist article on the issue.