Opposition to President Obama’s campaign to reform the foreign-income deferral and to address what the administration describes as “tax haven abuses” has been subdued to this point. But it’s starting to heat up.

In remarks to the Senate Finance Committee in March, ranking member Charles Grassley (R-IA) was still playing defense, noting that “we need to be careful to separate loophole closers from generic tax increases on business. Tax increases that ultimately result in American companies shedding American jobs are not the right way to go.”

Many business leaders would agree, although so far they’ve been reluctant to say so. Earlier this week, though, Procter & Gamble chairman and CEO A.G. Lafley came out with guns blazing, arguing that the administration’s proposals would have a disastrous effect on corporate growth and job creation in the United States.

In a column in the Cincinnati Enquirer, Lafley wrote that overturning the rule that allows U.S. companies to defer taxes on foreign income “would have a dramatic, negative impact on the net income of American companies like P&G, and put us at a substantial disadvantage to our foreign competitors like L’Oreal, Unilever, Nestle, and Kao. It would be like penalizing a winning U.S. Olympic runner by tacking on extra seconds to his time just because he’s American, and causing him to lose the race to his competitors from other countries.”

About 40 percent of P&G jobs in Ohio are connected to the company’s global operations, Lafley adds, including many in high-paying areas such as engineering, design, and marketing and sales support. “In addition, our global growth provides us with higher earnings, which allows us to invest more here in America. This year, for example, we’re investing $1 billion in capital in the U.S., including the construction of a new state-of-the-art manufacturing facility in Utah that will initially produce 300 new jobs and provide as many as 1,000 jobs for our suppliers and contractors building the facility.”

The stakes are huge for P&G, which has 581 foreign subsidiaries, according the U.S. Government Accountability Office. That number includes 83 subsidiaries in locations that the GAO regards as tax havens or financial privacy jurisdictions, such as Luxembourg (where P&G has 6 operations), Bermuda (five), and the British Virgin Islands (two).

Lafley’s argument takes President Obama’s rhetoric about ending “tax breaks for companies that ship our jobs overseas” — with its disturbing undertones of protectionism — and neatly turns it on its head. While any attempt to defend the practice of sheltering foreign earnings in places like Barbados or Liechtenstein is almost certainly a losing battle, this is a timely reminder of the tight linkage between American jobs and American tax competitiveness (or lack of it) in the global arena. ###