The U.S. system for taxing corporate profits is outdated, ineffective at raising revenue, and creates perverse incentives for companies to shelter profits overseas. It is also, for most U.S. companies most of the time, a pretty good deal, which is one of the big reasons why any serious overhaul will be so difficult to achieve.

Overview The once-bipartisan consensus favoring agreements that reduce barriers to trade and investment has broken down, largely because of a decades-long failure of policy to facilitate the adjus…