Apple: The U.S. Tax Code Is So Broken, We’re At A Competitive Disadvantage Against Samsung

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U.S. Senator Rob Portman from Ohio has just raised a fascinating point at today’s Senate Sub-Committee Hearing to Examine Offshore Profit Shifting and Tax Avoidance by Apple Inc.

The American corporate tax system is so broken that Apple is at a competitive disadvantage against Samsung when it comes to the taxes it pays globally, and how easily it moves its money around.

Senator Portman pointed out to Apple CEO Tim Cook and CFO Peter Oppenheimer that, globally, Apple and Samsung pay the same tax rate, when all loopholes are accounted for: about 14%.

Apple has tax havens and holding companies set up to reduce its tax burden, but any cash that comes into America must pay a 35% corporate tax rate.

Samsung, however — Apple’s biggest competitor — operates out of South Korea, where the corporate tax rate is just 25%.

Peter Oppenheimer agreed as to what this meant: “Samsung is able to freely move its income, where as we can not.”

Portman pointed out the absurdity of this. “It’s worst for Apple because they can’t bring their money home. Your investment options are a lot more limited.”

In other words, because of America’s byzantine corporate tax code, which is not globally competitive, Cupertino is at a competitive disadvantage against Samsung… symptomatic of a larger problem. American companies are at a disadvantage internationally when it comes to our tax codes.

About the author

John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his wife and two parakeets. You can follow him here on Twitter.

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