FOREIGN COMPANIES : Doubts Greet Proposal to Obtain More Taxes From Overseas Firms : Commerce: President-elect seeks billions of dollars more, but enforcement efforts have yielded little additional revenue so far.

WASHINGTON —  One of the linchpins of President-elect Bill Clinton’s economic revival plan--a proposal to extract billions of dollars in taxes from foreign companies doing business in the United States--is drawing skeptical reaction as evidence surfaces that current collection efforts are yielding small gains.

By closing loopholes and instituting more vigorous enforcement, Clinton has said he believes that the federal government can raise as much as $45 billion over four years from foreign companies, which take in nearly $1 trillion in revenue annually.

But while a number of foreign corporations pay little or no taxes in the United States, many experts believe that Clinton vastly overstates the possible revenue that can be gained from tougher enforcement of tax laws.

In addition, some economists worry that cracking down on foreign companies could lead to retaliation against U.S. firms doing business abroad. These experts note that the tax debate comes amid fast-rising tension between the United States and some of its trading partners.

In one high-profile case, Japan’s Matsushita Electric Industrial Co., the nation’s largest consumer electronics concern, said Tuesday that it has signed an agreement with the Internal Revenue Service. The settlement is one of a handful of accords that the agency has recently negotiated to try to ensure that foreign companies pay their fair share of U.S. taxes.

Most economists agree that many foreign companies camouflage their profits by manipulating the price of goods sold between overseas parents and their U.S. operations. They accomplish this mainly though “transfer pricing,” the amount that a company charges its affiliates for products or services. When U.S. subsidiaries pay higher prices to the parent, their taxable U.S. income is reduced. But the profit of the overseas parent--which is exempt from U.S. taxes--rises accordingly.

But foreign companies have been successfully challenging Internal Revenue Service efforts to collect taxes allegedly lost to transfer pricing, some experts say. And others assert that even if foreign corporations paid the same tax rate as U.S. companies, the President-elect’s arithmetic still doesn’t add up.

“His projection of some $40 billion in tax collections from foreign companies seems wildly exaggerated,” Jeffrey E. Garten, senior adviser to Blackstone Group, a New York investment firm, writes in the upcoming issue of Foreign Affairs quarterly. Garten, who is also a professor at Columbia University’s Graduate School of Business, adds: “The President-elect should rethink his policies on this front.”

In 1989, the U.S. Treasury reported that U.S.-owned companies paid 1.08% of their annual $7.8 trillion in revenue in corporate income tax. Foreign-controlled companies in the U.S. paid 0.64% of their $953 billion in revenue. If foreign corporations were to pay the same rate as U.S. firms, they would give the federal government about $16.8 billion over four years, about $28 billion short of Clinton’s projections.

Another government study reportedly found that the IRS had only limited success in recovering additional taxes in transfer pricing cases involving foreign companies that had appealed their cases with the agency. From 1987 through 1989, the government got only 26.5% of the $757 million it sought.

“I don’t think we are dealing with foreign companies that are tax cheats,” said Aaron Rubinstein, a partner at the New York-based accounting firm KPMG Peat Marwick, which has prepared a study on the issue.

Like many tax experts, Rubinstein contends that most foreign corporations doing business in the United States already pay higher tax rates in their own country than they do here. Thus, he asks, “Why would a company coming from a high tax jurisdiction shift (profits there) from a relatively low tax jurisdiction” such as the United States? “It’s a zero-sum game.”

While the transfer-pricing debate rages, the IRS has proposed several new regulations aimed at wresting more taxes from foreign firms, including a plan that would restrict the ability of a foreign bank to take an interest deduction for its U.S. real estate loans.

But the tax efforts have touched off a firestorm of criticism.

Britain’s ambassador has reportedly complained to Clinton aides that U.S. taxes paid by British firms are proportionately more than the amount U.S. firms pay in Britain.

The taxation director of Barclays Bank flew to the United States late last month to personally complain to IRS officials that “an increasingly hostile tax environment is at least one cause for (the) gathering withdrawal of British banks from the U.S.” The official, David Elvidge, noted that U.S. operations of British banks have assets of $56 billion and employ 7,250 people.

“This dispute is likely to exacerbate relations with companies and foreign countries . . . at a time when we are still very dependent on investment from abroad,” said William Nifkanen, chairman of the CATO Institute, a policy research group in Washington. “The only conditions under which it pays for a foreign corporation to shift their taxes to their home country is when their own tax rates are lower than the U.S., and that’s a very rare occurrence.”