Tim Cook Goes To Washington And Gets An Earful Over Apple's Tax Policies
May 21, 2013
Tim Cook has probably seen better days. In front of a U.S. Senate panel, the Apple CEO vehemently defended his company against charges that the tech company avoids paying billions of dollars in taxes by stashing funds offshore. However, despite Cook's words, many of the senators remained skeptical, according to Politico.
Cook's address in front of the Permanent Subcommittee on Investigations came soon after the Senate released a report claiming that Apple shielded about $44 billion from U.S. levies. This money, were it to be returned to the U.S., would be subject to a 35 percent tax.
The Apple CEO said that his company is a leading U.S. taxpayer that has created thousands of new jobs. In addition, he said that the U.S. Tax Code itself is to blame for many of the issues because it hamstrings "American corporations in relations to our foreign competitors.”
During testimony, Cook said that Apple paid more than $6 billion in federal taxes in 2012, and expects to pay much more this year.
In defending his company, Cook stated that, “We are proud to be an American company and equally proud of our contributions to the American economy."
Joining Cook at the hearing was Peter Oppenheimer, Apple's chief executive officer. He said that Apple's international structure isn’t meant to reduce its taxes in the United States, since those earnings are already taxed in their local jurisdiction.
Chairman Carl Levin would have none of it. Instead, the Michigan Democrat said that Apple uses "tax avoidance" strategies and "gimmicks" to avoid paying taxes. For his part, the ranking Republican member John McCain stated that "Apple’s corporate tax strategy reflects a flawed corporate tax system — and it’s a system that allows large multinational corporations to shift profits offshore to low-tax jurisdictions."
Apple's biggest defender was Sen. Rand Paul (R-Ky), who said that the committee should "apologize" for "bullying" executives. He went on to say that "If anyone should be on trial here, it should be Congress."
Cupertino isn't the first tech company to be grilled by the committee. In 2012, Microsoft and Hewlett-Packard executives also faced questioning over tax practices.
What comes of this hearing remains to be seen. Despite the critism, no one on the committee called Apple's practices illegal.
Levin did say, however, that “No company, no company, should be able to determine how much it’s going to pay in taxes."