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The United States has the highest marginal corporate tax rate in the world, at 39.2%.

Corporations, Wall Street, Mitt Romney and even President Obama all argue that rate is too high for U.S. companies to be competitive in the global economy.

[Related: America Is #1...In Corporate Taxes]

That would be the case if corporations paid such high rates but often they don't. Take Microsoft. The company avoided at least $6.5 billion in taxes using transactions with subsidiaries in Puerto Rico, Ireland, Singapore and Bermuda that were perfectly legal, according to the Senate's Permanent Subcommittee on Investigations, which held a hearing Thursday on corporate tax avoidance.

Carl Levin (D-Michigan), chairman of the subcommittee told reporters, "These loopholes and abuses exact a tremendous cost…What these gimmicks do is shift the burden of taxes onto citizens and business who don't use armies of lawyers and accountants."

"The scandal is the law," says David Cay Johnston, a Pulitzer Prize-winning reporter and author of "The Fine Print: How Big Companies Use 'Plain English' to Rob You Blind."

He told The Daily Ticker: A 1909 law requires that companies not hold more cash than needed to reasonably run their business. If they don't re-invest the extra cash into the business or pay dividends, they face a 15% penalty. President Reagan added a loophole to the law allowing companies to avoid the 15 percent penalty if they hold the extra funds offshore. Using that loophole, companies like (MSFT) and Hewlett-Packard (HPQ) can borrow against some of those foreign assets ehole also reducing their tax liability.

[Related: Romney Adviser: Yes, We're Going To Slash Taxes Without Increasing The Deficit]

Using another legal corporate tax loophole, 2700 companies in 19 states pocketed state income taxes withheld from employees pay, according to Johnston. He says such tax breaks cost the average American family of four $900 a year.

General Electric (GE), Goldman Sachs (GS) and Procter & Gamble (PG) have these deals as do some foreign firms, including Siemens, Electrolux and European and Japanese banks. Illinois is a prime example of a state that uses this tax tactic to persuade businesses to stay within its borders. In the book Johnston writes:

"Ford got a deal in 2007 by threatening to close an automobile assembly plant. In 2009, when the economy was in the worst shape in eight decades, Chrysler and Mitsubishi used threats of assembly plant closings to get similar deals....