Apple CEO Tim Cook is scheduled to appear before the U.S. Senate Permanent Subcommittee tomorrow as part of a probe into tax evasion strategies among American corporations. Apple released its official testimony for the hearing earlier today, noting that is is one of the biggest taxpayers in the country.
Among the witnesses tomorrow will be Apple executives, Democratic Senator Carl Levin of Michigan, Republican Senator John McCain of Arizona, and members of the Treasury Department. “The subcommittee will spotlight Apple’s extensive tax-avoidance strategies,” according to Levin.
One of the main critiques of Apple’s behavior is that the company funnels billions of dollars offshore through subsidiaries around the globe, effectively paying taxes nowhere until the money is needed.
“Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven,” said Sen. Levin. “Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere. We intend to highlight that gimmick and other Apple offshore tax avoidance tactics so that American working families who pay their share of taxes understand how offshore tax loopholes raise their tax burden, add to the federal deficit and ought to be closed.”
“Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale, it is also among America’s largest tax avoiders,” said Sen. McCain. “A company that found remarkable success by harnessing American ingenuity and the opportunities afforded by the U.S. economy should not be shifting its profits overseas to avoid the payment of U.S. tax, purposefully depriving the American people of revenue. It is important to understand Apple’s byzantine tax structure so that we can effectively close the loopholes utilized by many U.S. multinational companies, particularly in this era of sequestration.”
McCain also said that, “The proper place for the bulk of Apple’s creative energy ought to go into its innovative products and services, not in its tax department.” And while the Senate has tax evasion on the mind, Apple’s testimony from earlier revealed that Cook and co. are willing to raise the tax code if necessary. “Apple is not opposed to such a result [higher taxes] if it occurs in the context of an overall improvement in efficiency, flexibility and competitiveness. Apple believes the changes it proposes will stimulate the creation of American jobs, increase domestic investment and promote economic growth.”
An article in The New York Times from last year described how Apple “sidesteps” billions in taxes every year:
Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.
If you’re up to it, you can read Apple’s 17-page testimony and the Senate’s 40-page memorandum to compare the arguments.
Source: Carl Levin
Via: Bloomberg
