Financial Executives International has written to congressional leaders criticizing President Obama’s proposal to close foreign tax credit loopholes in exchange for making the research & development tax credit permanent.

Obama proposed this month to extend the R&D credit and allow companies to deduct 100 percent of their capital investments in plant and equipment through the end of 2011. The cost of the tax credits and about $50 billion in infrastructure spending on building roads, railroads and airports would be offset largely by cracking down on multinational companies that take advantage of foreign tax credits and have been blamed by the White House for shipping jobs overseas.

In a letter to the Democratic and Republican leaders of the House and Senate, FEI Committee on Taxation chairman Ron Dickel, an Intel Corp. executive, expressed concerns with Obama’s proposals and the recommended revenue offsets. “While, in principle, COT strongly supports pro-growth and recovery proposals, the committee has significant concerns with the president’s proposals after taking account of the proposed revenue offsets,” he said. “Otherwise-constructive policy proposals can produce a net negative effect when coupled with tax increases or other significant revenue offsets that would make American companies less competitive worldwide.”

Dickel, who is also vice president of finance and director of global tax and trade at chip maker Intel Corp., took issue with the proposed changes in the taxation of corporations’ foreign income. “In response to the president’s remarks on potential revenue offsets, we submit it is critical that the U.S. maintain its current tax rules relating to foreign business income until fundamental tax reform can be considered,” he wrote. “Any proposal that would significantly change the current mitigating elements of our international tax rules (including deferral, check-the-box regulations and the foreign tax credits) would have significant negative consequences for many U.S.-based worldwide companies and their U.S. employees. Current international tax rules have been enacted over time in an attempt to keep worldwide American companies on a somewhat level playing field.”

Dickel pointed out that business leaders are already contending with the “negative consequences resulting from recent piecemeal changes to the U.S. international tax laws (e.g., limitations on the flexibility to repatriate foreign earnings for U.S. investment, and the denial of foreign tax credits with respect to foreign income not subject to U.S. taxation by reason of covered asset acquisitions under Section 338 of the IRC).”

“Further significant shifts in U.S. tax policy should only be introduced and considered in the context of a broader tax reform effort, in which a significant corporate tax rate reduction is considered concurrently,” he wrote. “As a matter of sound tax policy, COT also opposes singling out specific companies or industries for increased taxes or other significant revenue offsets. Such measures disrupt and distort business and investment decisions by individuals and businesses to the detriment of the U.S. economy.”