New tax rules being considered by the Ohio General Assembly could cost Cincinnati's Convergys Corp. $5 million or $6 million a year — and could cause the company to leave town, Mayor Charlie Luken warned Tuesday.

        “It has the potential to be the item that pushes Convergys across the river to Kentucky,” Mr. Luken wrote this week in a letter to Gov. Bob Taft and Senate President Richard Finan, R-Evendale.

        Convergys, a customer service company with offices at three downtown locations and a fourth in Norwood, wants to consolidate its headquarters under one roof. Cincinnati officials are pushing a site on the riverfront, but the company is also exploring other locations.

        At the same time, Ohio lawmakers are considering a number of changes to close the state's projected $1.7 billion budget deficit. Closing the passive investment credit “loophole,” as some call it, would bring in another $50 million, according to some estimates.

        “I don't mean to minimize the state's problems, but losing 2,000 jobs of this salary range is something the state can't afford to happen, either,” Mr. Luken said. “I don't know much about passive investment credits, but whatever it is, they don't do it in Kentucky.”

        But what some people call an onerous tax regulation, others might call an abusive tax shelter, said Gary Gudmundson, a spokesman for the Ohio Department of Taxation.

        He gives this example of how a passive activity credit works:

        Geoffrey, the trademark giraffe of the New Jersey-based Toys-R-Us chain, is actually owned by a Delaware subsidiary called Geoffrey Inc. Toys-R-Us pays Geoffrey Inc. royalties — a “passive investment” — for the use of the trademark and writes off the expense. Geoffrey Inc. pays taxes at a lower Delaware rate.

        Convergys spokeswoman Renea Morris said she did not know what part of the company's operations were subject to the passive activity credit. Mr. Luken said the company told him it involved a subsidiary in Utah, where Convergys has a call center employing 2,000 people.

        “It would be a disadvantage to us and our shareholders if we had an additional tax to us of $5 million,” Ms. Morris said.

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