Senator John McCain just laid out his case against Apple in Washington D.C. in a Senate hearing about Apple’s tax rates, and he’s out for blood.
According to McCain, although 95% of Apple’s research and development happens in the USA, they funnel most of their profits through overseas entities that are not tax residents in any country in the world.
Ireland is a big target for McCain here. Ireland has long had liberal tax policies in an attempt to attract foreign companies, but McCain says that Apple paid less than $10 million in taxes on $22 billion in earnings in Ireland, a tax rate of less than 1.20th of 1%.
“In my view, loopholes like these, are harmful in that they allow large corporations huge advantages over domestic companies, who can’t use overseas corporations to lower their domestic burdens,” said McCain.
“The American People will not tolerate it,” McCain continued. “Our tax system is broken and not modern, but I won’t let that excuse be used by Apple to explain why it’s okay for companies to not pay what they owe.”
McCain concluded, “Apple has a negotiated tax rate of less than 2%. They have created loopholes to avoid paying $44 billion in taxes on income. $102 billion of $145 billion of Apple’s cash on hand is overseas. It’s time for Apple to reinvest in America.”
Tim Cook is expected to offer testimony shortly. We’ll see what he says to all of this..