"60 MINUTES" REPORTS ON NEW TAX HAVENS WHERE AMERICAN COMPANIES ARE PUTTING THEIR PROFITS AND SAVING BILLIONS ON THEIR U.S. TAXES - SUNDAY ON CBS

Just when the U.S. Treasury needs the money most, American companies are finding new ways to shift profits to overseas tax havens and legally avoid paying the U.S. tax rate of 35 percent - among the highest in the world. Those companies say they are doing what they must to compete in the global economy and please their shareholders. But others feel the companies are getting an unfair break by moving business to places like Switzerland and Ireland. Lesley Stahl reports on the debate for a 60 MINUTES story to be broadcast Sunday, March 27 (7:00-8:00 PM, ET/PT) on the CBS Television Network

Weatherford International is a Texas-based oilfield services company that used to be incorporated in the Caribbean and recently moved to the small town of Zug, Switzerland. About 26,000 people live in this town, but some 30,000 companies are registered in the area. Weatherford's Zug address is little more than that: an address. The company still has 2,800 workers in Houston and an upper management that rarely goes to Zug. But incorporating here allows them to significantly lower their tax bill. The average tax rate in Zug is between 15 and 16 percent.

These maneuvers irk Rep. Lloyd Doggett (D.-Texas), even though they're perfectly legal. He's sponsored a bill that will force companies to pay taxes based on where their top executives spend the most time and make the most decisions. "Let them pay the same way that other Houston-based companies pay," says Doggett, who blames lobbying and strong-arm politics for allowing the practice to be legal. "I think it was a shenanigan when some of these companies felt so strongly about America that they renounced their American citizenship and began saluting a foreign flag," he tells Stahl.

Faced with the threat of legislation from Doggett, several companies, including Weatherford, are moving top executives to Switzerland, sending top-level jobs overseas. But there's a far larger migration going on. American companies remaining incorporated and headquartered in the U.S. are shifting a lot of their assets, products and jobs in manufacturing and research to low-tax countries like Ireland and Switzerland. Profits accumulating there, stay there, however, because companies cannot bring back the money into the U.S. without paying the full 35 percent tax. So, not only is the U.S. Treasury not getting tax money it badly needs, this system actually seems to encourage companies to further develop and expand abroad.

"We leave the money over there," explains John Chambers, CEO of high-tech giant Cisco. "I create jobs overseas; I acquire companies overseas; I build plants overseas and I badly want to bring that money back," he tells Stahl. Chambers says his company has almost $40 billion trapped overseas, that he can't bring back because of the high U.S. tax rate. Chambers is advocating for an overhaul of the entire tax code, but he's also advocating for a one-time tax break to allow U.S. companies to bring back their earnings kept overseas - over a trillion dollars, at a reduced tax rate. Even at a reduced rate, it would translate to billions of dollars for the U.S. Treasury. "What is your downside for money that isn't going to come back anyhow? I'd say your downside is zero," says Chambers.