Business groups gear up to fight Obama tax crackdown

Washington — Coca-Cola Co. is a global company with operations in every corner of the world.

But like other big multi-national companies, the Atlanta-based soft drink giant could soon find itself in the cross-hairs of federal tax officials because of its subsidiaries in a few places — namely the Cayman Islands, Costa Rica and other countries known as havens from U.S. taxes.

Under a proposal by President Barack Obama earlier this week, individuals and big U.S.-based international companies like Coke could lose their ability to defer taxes on income made from overseas subsidiaries. They also could lose their ability to move money to other countries to help avoid or defer U.S. taxes.

Obama says closing the corporate tax loopholes would raise $210 billion over the next decade and would also help keep companies from moving more jobs overseas.

Business groups say it will do the exact opposite, encouraging companies to move not just some operations overseas but their entire corporate headquarters.

Opponents are gearing up for a major fight that’s expected to spill over into Congress in coming weeks.

“This is really shooting U.S. companies … in the foot” when it comes to competitiveness, said John Castellani, president of the Business Roundtable, an association of corporate chief executive officers.

According to critics like Castellani, eliminating the right to defer taxes on foreign profits would effectively result in double taxation for companies.

At Coke, spokewoman Kerry Kerr declined to comment on the impact the Obama proposal might have on the company. She said the company’s U.S. taxes are disproportionately greater than the share of Coke’s sales in the United States.

U.S. Sen. Saxby Chambliss (R-Ga.) said he has heard from several Georgia companies concerned about the Obama plan, although he declined to name them.

“If you’re going to (have) a very complex piece of legislation that’s going to require double taxation on the part of domestic corporations, then what you’re going to see is jobs being shipped overseas,” said Chambliss.

In the House, U.S. Rep. Tom Price (R-Ga.) of Roswell, said Obama’s tax plan “would permanently ship away our competitiveness.”

“While the president claims he wants to preserve American jobs, his plan will have the exact opposite effect,” Price said.

Roseanne Altshuler, co-director of the nonpartisan Tax Policy Center, said Obama’s proposal probably wouldn’t be as damaging as some critics suggest. Companies would still be able to take advantage of some foreign tax credits, for instance, that could reduce their tax burden. But she acknowledged it could prompt some companies to reconsider if they want to be based in the United States because of higher tax rates.

“There may be some unintended consequences,” Altshuler said.

— Staff writer Joe Guy Collier contributed to this article.