US subsidiaries do not pay tax on foreign income if that income is not "effectively connected" to the parent company's operations. Those that do, receive a Foreign Tax Credit for that portion of their tax liability that is equal to the tax they owe to the foreign jurisdiction. Foreign companies pay tax on their earnings in the U.S., period.
I am not a CPA or tax lawyer, and I certainly don't practice in international taxes, but I believe that all of your points are all correct: (1) U.S. subsidiaries do not pay tax on foreign income that is largely unconnected and is not repatriated (2) U.S. entities, both corporate and personal, receive a foreign tax credit on taxes paid to foreign governments, and may be eligible for other types of tax benefits (for instance, if I remember the details, U.S. citizens who are domiciled outside of the U.S. for 330 days in a year do not have to pay any U.S. taxes on something like the first $80,000 of international income) (3) Foreign companies pay taxes in the U.S.
I am not sure how (2) and (3) are germane to my mention of the "Invest in the USA Act" which affects the repatriation of profits that were previously untaxed by the U.S. government, but this is out of my area and I am missing something obvious, which has certainly been known to happen.
(1) is clearly germane, but appears to me to have left out the additional caveat that profits not be repatriated, which was central to my point about repatriation.
It appears that we will get to find out the effect of the act; I checked, and apparently the legislation passed as part of the "American Jobs Creation Act of 2004" just this month. The expectation is that hundreds of billions of profits will be repatriated due to the much lowered tax rate (I believe that the original proposal was to drop it to 5% as opposed to the usual corporate rate of 35%); it appears that we will soon get to see the results.
Assuming that this is correct, then I think it would be great if the Republicans hold it up high as another tax cut that should have great promise to stimulate the economy. The nice thing is that while it is technically a tax cut, in actuality we would not have any expectation of seeing any tax dollars at all since those profits would have most likely continued to stay overseas. Accepting a reduced rate in order to get them to come back at all seems to me to be a good move.