When President Obama unveiled proposed changes to the U.S. tax code last week, the underlying message was that a crackdown on so-called offshore corporate tax havens would be a win-win for tax coffers and U.S. jobs. But many international tax experts say it's just not that simple, and the Obama proposal threatens to compound the problem because businesses typically hire off-shore not to take advantage of a tax loopholes but because of wages are so much lower. The Obama plan, which still requires approval from Congress, would reduce the incentive for U.S. companies to invest abroad by limiting available deductions on things like payroll expenses and restricting eligibility for foreign-tax credits.

Cym Lowell, an international tax attorney at Gardere Wynne Sewell, says the tax proposal will hurt the U.S. companies' competitiveness abroad and will not likely have the intended effect. "U.S.-based companies already face a higher tax rate when they enter the global marketplace and this would further penalize them," Lowell says. "To wrap these proposals in the swaddling cloth of ‘protection of U.S. jobs' is dangerously simplistic." Gardere partner Mark Martin agrees, "Obama needs to be sensitive to the ability to be competitive. It is attractive political rhetoric to call for higher taxes for big business, but the reality is not nearly so obvious." To interview Mr. Lowell or Mr. Martin, contact Rhonda Reddick at 800-559-4534 or rhonda@androvett.com.