NEW YORK (TheStreet) -- According to big U.S.-based multinationals, the federal tax code is punishing them for being American.

Ascending to Capitol Hill on Thursday for a little anti-tax lobbying, the likes of Caterpillar ( CAT - Get Report), United Technologies ( UTX - Get Report) and medical device maker Zimmer ( ZMH all presented arguments to the House Ways and Means Committee on Thursday on why the United States should abolish the taxes it levies on the profits that American companies book overseas.

Under the current U.S. tax code, when companies that do business in foreign countries repatriate earnings from those countries back to the homeland, they must pay the difference between the U.S. rate and what they've already paid in taxes to those foreign governments.

Because the U.S. has the second highest statutory tax rate in the developed world (about 39%, which stands behind only Japan's 39.5%), U.S. multinationals will almost take a tax ding -- at least according to the multinationals.

Most other countries don't do this, big companies say. They have what's called a "territorial" tax system, which means that the government levies taxes only on the profits that corporations earn from business conducted domestically. The U.K. moved to a territorial system only last year. Japan is in the process of doing the same. That leaves only the United States.

And that, says big business, is a big problem.

But according to opponents of a territorial tax system, the multinationals are being a little misleading. The real or effective all-in tax rate in the U.S. -- after all the deductions and offsets are totted up -- is very close to the effective tax rates imposed by other large economies, according to a study by Jane G. Gravelle, a specialist in economic policy at the Congressional Research Service, who also testified before the House committee on Thursday.

The multinationals are simply looking, their critics say, for a tax break, as big companies are wont to do.

They also deny it. "We're not asking for a free lunch, just a level playing field," said Jim Dugan, a Caterpillar spokesman, echoing a refrain that the company's chief financial officer, Ed Rapp, used in his testimony before the congressional committee on Thursday. Caterpillar and their peers argue that the current U.S. tax codes impairs them competitively when trying to go up against foreign rivals. Caterpillar especially is worried about China. "A number of Chinese equipment manufacturers we compete with have said they want to become a major rival of Caterpillar," said Jim Dugan. "What we are seeking and asking for is a tax system that's competitive."

The likelihood of the multinationals having their way is unlikely, at least before the next presidential election, says Michael Greatz, a tax law professor at Columbia Law School in New York. "I think there's got to be some change," he said in an interview. "We can't sit around with this high corporate tax rate when the rest of the world is marching to lower corporate tax rates."

-- Written by Scott Eden in New York

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