Jesse Drucker of Bloomberg has been doing some excellent reporting of the corporate-tax system and how companies are manipulating it to avoid billions in taxes.

Over the holidays, Bloomberg ran another Drucker piece reporting how corporations dodge—and that’s Bloomberg’s word there—about $25 billion a year in repatriation taxes.

The news hook is that corporate executives like Cisco billionaire John Chambers are asking the White House to give them another repatriation tax holiday like Bush did a few years ago (Bloomberg neatly dispenses with the stimulus justification there by noting corporations already sit on nearly $2 trillion in cash on their balance sheets).

What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers — including “the Killer B” and “the Deadly D.”

Here’s how pharmaceutical giant Merck repatriated billions of dollars from overseas to buy another company, enabling it to skip a more than $3 billion tax bill. Here’s how it did that:

At the deal’s closing, Merck’s foreign subsidiaries lent $9.4 billion to a pair of Schering-Plough Dutch units. Then the Dutch companies used those funds to repay a pre-existing loan from their U.S. parent, securities filings show. The $9.4 billion ended up with Schering-Plough shareholders as part of the cash owed under the merger, according to the company’s disclosure.

Bottom line: Merck used its overseas cash to pay the former Schering-Plough shareholders — with no U.S. tax hit. In considering whether companies owe taxes in such cases, the IRS often asks whether payments from an offshore unit constitute a dividend, which would be taxable.

There seems to be little disincentive for mega corporations not to engage in such schemes. What happens if you get caught? You pay the tax and maybe a little fine? Most of the time, you’re going to get away with it.

Drucker also points to another drug company, Pfizer, that actually paid the repatriation tax but finagled its books so it didn’t affect its publicly reported profits. And IBM used a variation on the Killer B strategy just months after the IRS banned it. IBM found a tiny loophole, which the IRS closed two days after IBM exploited it.

The incentive to do these things is strong since companies have used accounting games to move their profits overseas.

U.S. drugmakers shift profits overseas far in excess of actual sales there. In 2008, large U.S. pharmaceutical companies reported about four-fifths of their pre-tax income abroad, up from about a third in 1997, according to a March article in the journal Tax Notes by Martin A. Sullivan, a contributing editor and former U.S. Treasury Department tax economist. Their actual foreign sales grew more slowly, to 52 percent from 38 percent.

So when you hear corporate executives and The Wall Street Journal editorial page crying about the unfair U.S. corporate tax system, know that they’re full of it:

“The current U.S. international tax system is the best of all worlds for U.S. multinationals,” said David S. Miller, a partner at Cadwalader, Wickersham & Taft LLP in New York. That’s because the companies can defer federal income taxes by shifting profits into low-tax jurisdictions abroad, and then use foreign tax credits to shelter those earnings from U.S. tax when they repatriate them, he said.

This ought to be a scandal in and of itself. Alas, it’s a classic example of the real scandal being what’s legal.

Great work by Drucker and Bloomberg.