qaq parent
Large companies will work around this by putting some entity in a jurisdiction with different rules and that entity licensing IP to US entity. Small companies will get screwed.
The SEC and IRS have penalized this sort of IP gerrymandering, e.g. Microsoft's $28Billion fine https://techcrunch.com/2023/10/12/microsoft-faces-28-9-billi...
The problem with these rules is that they're unwilling to actually provide any principles because of what it would do.
If hiring engineers in California required you to declare your global profits in California, companies would prefer to hire engineers in another state or another country that doesn't do that, so tax authorities aren't willing to say that's required because of what it would do to the local labor market. But if they don't say that then companies declare their profits in Puerto Rico or Ireland.
You can't have it both ways. Governments have to choose what they actually want to tax, and then take the consequences of companies avoiding doing that in their jurisdiction.