A group of technology heavyweights, including chiefs of IBM and Motorola Inc enlisted a former Clinton administration economist to beat back President Barack Obama's plan to boost some taxes on overseas profits.

The Technology CEO Council recruited Robert J. Shapiro, a former top Commerce Department official, who wrote a report released on Monday arguing that significant jobs losses could occur under Obama's plan.

Last month, Obama introduced a proposal to raise $210 billion over a decade in part by tightening tax rules on income earned abroad. The administration says current policy spurs job creation overseas, while U.S.-based multinational companies say precisely the opposite is true.

Shapiro acknowledged his job loss estimates don't correspond to Obama's proposal, because the report examines elimination of tax deferral of foreign income, while Obama's plan is a modified version of that.

The direction of the effect is very clear: it would significantly reduce the effective post tax earnings from foreign operations and in so doing would have these so-called adverse effects, which include job losses in the United States, Shapiro told Reuters.

A respected economist who reviewed the report, however, questioned the underlying data assumptions cited.

Their numbers are just way out there, said Rosanne Altshuler, an economist at the Brookings-Urban Institute's Tax Policy Institute.

For example, the Shapiro report estimates that repeal of deferral would have cut earnings at foreign subsidiaries of U.S. multinationals by $57.2 billion in 2004.

But the congressional Joint Committee on Taxation estimates that the government has raised a fraction of that on annual basis from the policy, making that estimate seem inflated.

Current law allows companies to defer income tax until they bring the income back into the United States, for example, in the form of dividends.

Companies can take deductions on expenses linked to income earned abroad immediately though. Obama wants to require companies to delay deductions until the foreign income is claimed.

It's the no. 1 issue in Washington for a majority of high tech leaders at a time when there is a lot on the table in Washington, said Bruce Mehlman, executive director of the Technology CEO Council, which also includes chiefs from Intel and Hewlett-Packard .

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When introducing Obama's deferral plan, a senior Obama administration official said the goal is to spur a company to locate a plant in Michigan instead of Malaysia.

Altshuler said she doubts the Obama administration's argument that his tax changes will save or create jobs, though and said it is possible that it could decrease jobs.

The Shapiro report is in part based on a study by Harvard Business School Professor Mihir Desai and colleagues finding a statistical link between foreign investment by U.S. companies and domestic job creation.

The top U.S. corporate tax rate of 35 percent is among the highest in the world, though Obama officials say that with deductions and loopholes it is effectively much lower, at about 20 percent.

The reality now is that companies pay very little in U.S. taxes, the senior Obama administration official said.

(Editing by Derek Caney)

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