WASHINGTON May 4 Multinational companies on
Monday said President Barack Obama's proposals to rein in
corporate loopholes will make them less competitive, while
consumer advocates said the changes are long overdue fixes for
Obama, carrying out a campaign promise, plans to raise $210
billion over a decade by revising a tax policy that lets global
companies defer income earned abroad, and by closing a loophole
administration officials say lets companies hide income from
A broad swath of companies -- from banking institutions and
hedge funds to pharmaceutical and technology companies -- will
be impacted by the changes, experts said.
"It's really hitting most Fortune 100 companies that depend
to a great deal on growth of foreign markets for growing their
total earnings," said Drew Lyon, a principal at
PricewaterhouseCoopers' Washington office who advises Fortune
500 companies on tax policy.
About half of multinationals companies' income is earned
abroad, he said.
One proposed change, which will raise about half of the
$210 billion, requires companies that defer income earned
abroad to also defer deductions associated with that income.
That change is not as broad as one advocated by U.S. House
of Representatives Ways and Means Chairman Charles Rangel
advocated in 2007, Chamber of Commerce tax counsel Caroline
"It is a bit narrower because you can still take deductions
for research and development," Harris said. "But it's still not
Global companies say they are subject to two layers of
taxation because most other industrialized countries do not tax
foreign income of their native companies.
But companies get tax credits to offset that policy,
according to Robert McIntyre of the Center for Tax Justice.
Another proposal would reform the so-called "check the box"
provision in the tax code that the administration says allows
companies to hide foreign subsidiaries by shifting the income
to tax havens.
"This is absolutely huge," McIntyre said. "It has allowed
an incredible amount of corporate sheltering."
The administration says this change would raise $86 billion
over 10 years.
Obama will roll out his ideas in an announcement at 11:05
a.m. EDT (1505 GMT), where he will be joined by Treasury
Secretary Timothy Geithner.
(Editing by Maureen Bavdek)