Obama: Crack down on business, individual tax havens

— -- President Obama's plan to crack down on off-shore tax shelters that benefit U.S. corporations and wealthy individuals sets the stage for an unusually direct Washington battle with high political and financial stakes, opponents and supporters said Monday.

Obama had barely finished outlining the plan when Republicans and business groups signaled that blocking the proposal would be a top priority.

Making good on Obama's campaign pledges of tax fairness, the administration predicted its plan would raise more than $210 billion in new revenue in the next 10 years by:

•Ending the policy that lets U.S. companies that invest overseas defer federal taxes on the resulting profits. Starting in 2011, they wouldn't get tax deductions until they pay levies on offshore gains.

•Eliminating a provision that allows U.S. companies that pay foreign taxes on overseas profits to claim a federal tax credit.

•Extending permanently a research-and-development tax credit that's set to expire Dec. 31.

•Terminating the "check-the-box" provision that lets U.S. companies legally reduce federal tax bills by shifting income to overseas subsidiaries they classify as branch offices.

•Tightening reporting laws for individual U.S. taxpayers with offshore assets, and hiring 800 new IRS workers for international tax enforcement.

Obama said the plan, part of a detailed budget proposal set for release this week, would address imbalances in "a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York."

Congressional Republicans agreed with the crackdown on tax evasion. But they said the plan would unfairly double tax U.S. multinational companies by forcing them to pay levies to both Washington and foreign countries — without the current deferral that cushions the impact. Other multinationals don't face such payments, they said.

"I cannot endorse a plan that gives preferential treatment to foreign companies at the expense of U.S.-based companies and the 52 million people they employ," said Senate GOP leader Mitch McConnell of Kentucky.