One argument we sometimes hear concerning U.S. international taxation is that, whereas the current U.S. system is "out of step" with world norms, other major OECD nations have figured out what to do. Just enact a territorial system, exempting foreign source active business income, perhaps with some moderate anti-tax haven rules, and you're done / good to go / insert bland bromide of choice.
One good thing about these other systems, as I emphasize in my book, is that adopting territoriality happens to rid you of both deferral and the foreign tax credit - but not because the tax rate on designated foreign source income. You can have a positive rate (preferably low for a bunch of other reasons) at that margin and be "full worldwide" in the sense of taxing foreign source income, at whatever rate you do, immediately and with foreign taxes only being actually or implicitly deductible. (Anti-tax haven rules, however, may effectively make them worse than deductible, a move that might itself have good rationales, as I discuss in the book.)
Anyway, back from the detour to the main point. If everyone else has gotten it right, and they are now doing so great, why aren't they happy? The whole OECD / BEPS (base erosion and profit-shifting) issue shows that they do not think they have gotten it right. Note that a zero rate for foreign source income does indeed increase the temptation for profit-shifting, even relative to the dysfunctional U.S. system (in which resident multinationals with billions stashed abroad may at least find that this reduces the appeal of further income-shifting).
One answer I've heard to this point is that they are only unhappy about income-shifting by foreign multinationals, not their own (e.g., Starbucks in the UK, since it isn't a UK company). But even if this is true of the domestic politics, try finding an economist who will agree that a "national champions" strategy actually makes sense.
A second answer I've heard is that countries like to let foreign multinationals do some income-shifting, so that they will be more interested in inbound investment. An example might be the U.S. having no qualms about Toyota using debt to strip the income out of its U.S. plants, since this permits them to invest here without actually facing our 35% statutory rate on much of the profits they derive from U.S. production. They can only do this successfully because they aren't a U.S. company, and hence don't have to worry about generating taxable passive income via the interest outflows to foreign affiliates (or deduction disallowance against U.S. source income under our interest allocation rules).
The funny thing about this story is that it's the opposite of the first one. Now we're told that countries want to tax foreign multinationals less than domestics, rather than more.
I do believe this story has some truth, however. But what's happened in the BEPS controversy, is that the income-shifting has simply gone too far, from the standpoint of various countries including the U.S. (at least in the view of some people here). In effect, I see the countries thinking: "We were fine with you lowering your effective tax rate from A to B, which is why we didn't enact rules to stop you, but instead you've raced far past that point and lowered them all the way to C, which is less than we think we can and should get from you on domestic economic activity."
This is not to say whether the countries are right or wrong about this, from the standpoint of domestic national welfare - clearly a tough judgment to make, and one that depends in part on your normative inputs. But I do think it explains why they're not happy. And if they're not happy, we shouldn't be so quick to conclude that they have made life easy for us by showing us how best to tax income from cross-border investment.