Former US Senator pens defense of Apple's international tax strategy
Former U.S. Sen. John E. Sununu authored a newspaper column on Monday blaming the United States Congress, and not Apple, for policies that allow corporations to avoid American taxes.
Sununu, a one-term Republican Senator from New Hampshire, is now a columnist for the Boston Globe. In a piece published on Memorial Day, the former politician blasted members of the U.S. Senate Permanent Subcommittee on Investigations for singling out Apple on taxes when the company is following the laws as written.
John Sununu served as Representative and Senator for New Hampshire from 1997 to 2009.
Apple Chief Executive Tim Cook was called before the subcommittee to explain why Apple has $100 billion in cash overseas. Most of that money is kept through subsidiaries in Ireland, which allows Apple to avoid billions of dollars in repatriation taxes if those funds were to be brought back to the U.S.
The current tax rate for bringing overseas cash back to U.S. shores is 35 percent, one of the highest tax rates of its kind in the world. Cook argued before the subcommittee that a dramatic revision of the U.S. tax code is necessary to address that issue.
"Making the case for his company's decisions, Cook came off far better than the average witness on Capitol Hill," Sununu wrote in his column. "Perhaps it's easier to be blunt when you employ 60,000 workers in the United States, but lines like 'we pay all the taxes we owe ??every single dollar' set the tone from the start.
"In public and private sector alike, a defensive posture makes people think you have something to hide. Cook's confidence contrasted dramatically with IRS managers pleading the Fifth before Congress the very next day."
In Sununu's eyes, the blame for companies like Apple sheltering their funds overseas lies on Congress, which originally wrote the tax laws and has failed to update them to resolve these concerns. Other major American companies, including Google and Yahoo, also avoid paying U.S. taxes with subsidiaries in Ireland ??and some go even farther than Apple with holdings on Caribbean islands or bank accounts in the Cayman Islands.
Sununu joins U.S. Sen. Rand Paul (R-Ken.), who serves on the Senate committee that questioned Apple Chief Executive Tim Cook on his company's tax practices. During the hearing, Paul criticized his colleagues for "bullying, badgering and berating" a great American success story when Apple has broken no laws.
"We should have brought in here today a giant mirror, so that we can look at the reflection of Congress, because this problem is created by the awful tax code," Paul said.
Sununu, a one-term Republican Senator from New Hampshire, is now a columnist for the Boston Globe. In a piece published on Memorial Day, the former politician blasted members of the U.S. Senate Permanent Subcommittee on Investigations for singling out Apple on taxes when the company is following the laws as written.
John Sununu served as Representative and Senator for New Hampshire from 1997 to 2009.
Apple Chief Executive Tim Cook was called before the subcommittee to explain why Apple has $100 billion in cash overseas. Most of that money is kept through subsidiaries in Ireland, which allows Apple to avoid billions of dollars in repatriation taxes if those funds were to be brought back to the U.S.
The current tax rate for bringing overseas cash back to U.S. shores is 35 percent, one of the highest tax rates of its kind in the world. Cook argued before the subcommittee that a dramatic revision of the U.S. tax code is necessary to address that issue.
"Making the case for his company's decisions, Cook came off far better than the average witness on Capitol Hill," Sununu wrote in his column. "Perhaps it's easier to be blunt when you employ 60,000 workers in the United States, but lines like 'we pay all the taxes we owe ??every single dollar' set the tone from the start.
"In public and private sector alike, a defensive posture makes people think you have something to hide. Cook's confidence contrasted dramatically with IRS managers pleading the Fifth before Congress the very next day."
In Sununu's eyes, the blame for companies like Apple sheltering their funds overseas lies on Congress, which originally wrote the tax laws and has failed to update them to resolve these concerns. Other major American companies, including Google and Yahoo, also avoid paying U.S. taxes with subsidiaries in Ireland ??and some go even farther than Apple with holdings on Caribbean islands or bank accounts in the Cayman Islands.
Sununu joins U.S. Sen. Rand Paul (R-Ken.), who serves on the Senate committee that questioned Apple Chief Executive Tim Cook on his company's tax practices. During the hearing, Paul criticized his colleagues for "bullying, badgering and berating" a great American success story when Apple has broken no laws.
"We should have brought in here today a giant mirror, so that we can look at the reflection of Congress, because this problem is created by the awful tax code," Paul said.
Comments
Senator: The senate and the incompetent laws we produced while I was a part of it are the problem.
This is just all looking more and more like a pretense to give these companies a 'tax holiday' or big break to get offshore money back into the US. It sounds great if you're willing to overlook that it is money that they didn't pay taxes on in the US in the first place. If they are are supremely incompetent they will go along and then be surprised at the wave of increased offshoring that occurs. If you can pay low taxes on profits artificially made overseas and then bring that money into the US with little or no penalty- why would anyone be dumb enough to report profits inside the US?
If they are going to do that, they should just take it to its logical conclusion and be done with it. Set the corporate tax rate in the US to 0. Corporations already pay under 7% of what our government spends in a year. Just set it to 0, keep the money made in the US in the US, and we can stop pretending they are contributing their 'fair share'
The morons and un-American politicians that are blaming Apple for not paying their "fair share" are the ones that are responsible for the ridiculous tax laws to begin with. The tax laws are a mess because of them and they themselves are to blame. Do these people not take any responsibility for their own actions? Don't answer that, because I already know the answer.
How dare they call in Apple to be questioned for merely following the law. Do these hypocritical thugs who criticize Apple pay more than they should when filing their own taxes? No? Well, then they should STFU.
And this doesn't just apply to Apple, but it applies to any company or person that follows the current tax laws. As long as it's legal, then there is nothing to talk about really. Who are these communists and fascists to decide what somebody else's "fair share" is? If we're deciding what's fair, then we should open up a few gulags in Alaska or someplace else that's cold, and send these politicians there, because that sounds fair to me.
With the way that the incompetent baboons in the government spends our money, I'd say that the less money that you give the Feds, the more patriotic you are and the less the govt can waste, spend and steal.
I know there are a number of Cook critics around, but the more I see of him, the more impressive he is.
He's not Jobs - nor should he be. The situations were different. Jobs was a visionary and had to save a struggling company - and put it on the path to greatness. Cook inherited a great company and has to manage that. And even if their situations were the same, there's nothing wrong with different personality types running a company. Expecting two CEOs to have the same style is silly. It's larger than any other public company in the world - and needs to be managed like a large company, not an entrepreneurship.
Cook has done a great job of managing a large, complex, profitable company and it's good to see him getting some of the recognition he deserves.
Quote:
Originally Posted by swaylon
Agree. I am a republican and I am so tired of John McCain's mouth on this subject.
The dude is a RINO.
Exactly WHAT Taxes are Apple "Avoiding"? There is NO TAX on transactions happening overseas between overseas companies for goods produced overseas.
IF Apple is "Avoiding" this nonexistent tax then every company in the world outside the US is "avoiding" these taxes.
The US doesn't have jurisdiction over the world and cannot tax the whole world.
Jesus but this claim is stupid. (or a reflection of political ideology.)
Quote:
Originally Posted by jragosta
I know there are a number of Cook critics around, but the more I see of him, the more impressive he is.
He's not Jobs - nor should he be. The situations were different. Jobs was a visionary and had to save a struggling company - and put it on the path to greatness. Cook inherited a great company and has to manage that. And even if their situations were the same, there's nothing wrong with different personality types running a company. Expecting two CEOs to have the same style is silly. It's larger than any other public company in the world - and needs to be managed like a large company, not an entrepreneurship.
Cook has done a great job of managing a large, complex, profitable company and it's good to see him getting some of the recognition he deserves.
This was exactly what I was thinking when I was watching the replay on C-SPAN. Steve Jobs could never have pulled off that hearing without slamming back at those senile and decrepit Senators. Tim Cook never fired back, was gracious and set the tone right from the beginning. He made a few friends in Congress that day, and no new enemies. An amazing feat rarely duplicated in these show hearings.
Tim Cook was built to run the new Apple, now a massive company. Let's see if the dream team continues to deliver amazing products.
Mitt Romney pays only 10% of his income in taxes. This is less than the average middle-class blue-collar worker.
Google, like Mitt Romney, paid only $9 Million in income tax last year. It should have been the one to be scrutinized by Congress.
Apple, on the other hand, pays 1/40th of all the Corporate income tax in the United States. That is a HUGE chunk of corporate taxes when there are 6 MILLION CORPORATIONS in the United States.
I can't seem to edit my earlier comment, but this is the line I'm talking about from the article:
"for policies that allow corporations to avoid American taxes."
By this line of "reasoning", a guy in Zimbabwe who makes fine suits and sells them to fashionable men in Mozambique is somehow "avoiding" US Taxes. It's an asinine position.
It doesn't matter to them that Apple is paying more taxes than any other corporation, or more taxes than a thousand other corporations combined. They don't care.
They see that Apple is able to keep money and make profits and thus grow rich-- and they can't stand that.
To them, anybody who has a positive net worth is "avoiding taxes" because they want us all to be slaves.
Not that they will admit it, because when put in those words it's obvious just exactly how evil they are.
If the United States can tax income you earn in Japan and kept in Japan, then states should be able to tax income you make in other states. Luckily, not.
Quote:
Originally Posted by superdx
" Steve Jobs could never have pulled off that hearing without slamming back at those senile and decrepit Senators. "
Remember in Steve Jobs' last public appearance before some pissant board in Cupertino where he had gone to beg permission to build their corporate campus, and one of the alderman or whatever tried to extort more from him, and he said "Well, we like being in Cupertino, but we can move" or something along those lines.
Jobs made it clear how asinine she was being without slamming her.... I think Jobs was capable of that, publicly. It's only privately that he wouldn't tolerate bozos.
Quote:
Originally Posted by Jessi
Remember in Steve Jobs' last public appearance before some pissant board in Cupertino where he had gone to beg permission to build their corporate campus, and one of the alderman or whatever tried to extort more from him, and he said "Well, we like being in Cupertino, but we can move" or something along those lines.
Jobs made it clear how asinine she was being without slamming her.... I think Jobs was capable of that, publicly. It's only privately that he wouldn't tolerate bozos.
Indeed!
The new Apple CEO seems too polite. No wonder crooks are after him.
Quote:
Originally Posted by swaylon
Agree. I am a republican .... all the government wants is more money to squander away on Electric vehicle companies and dummy healthcare.
OK, how much did the government "squander away on electric vehicle" companies? Compared to what? What proportion of whose budget was that? What about all the boondoggle spending on Defense (e.g., the F-35)?
And what is "dummy" healthcare? I assume you mean Obamacare? Do you have data on its implementation, as well as impact on costs and health outcomes that I might have missed?
Can we please stop with these illiterate political talking points (from the left or the right).
Quote:
Originally Posted by jameskatt2
Mitt Romney pays even less in taxes than Apple. He has Cayman Island bank accounts. He has most of his income held overseas.
Mitt Romney pays only 10% of his income in taxes. This is less than the average middle-class blue-collar worker.
Ah, talking points from the Left......
The even funnier part is that according to the subcommittee, the cash is on US shores already. It's held in US financial institutions. It's just owned by an overseas subsidiary. The act of 'bringing cash home' would just involve switching the bank accounts in exactly the same place.
http://www.nytimes.com/2013/05/21/business/apple-avoided-billions-in-taxes-congressional-panel-says.html?pagewanted=2
"Apple Operations International, which is incorporated in Ireland — where Apple had negotiated a special corporate tax rate of 2 percent or less in recent years — but keeps its bank accounts and records in the United States and holds board meetings in California."
The mentions of cash always give the impression of a large cash pile somewhere that would take an effort to move but it's just numbers on a computer that can move anywhere at the click of a button.
It's companies that complicate the tax code in the first place by lobbying for the changes:
http://www.ft.com/cms/s/0/ee6c1b64-c1f2-11e2-ab66-00144feab7de.html
The complaint about complexity is given in defence of tax avoidance, not while lobbying to have it made more complex to benefit their specific needs. This is not necessarily Apple's doing but other large companies. Apple won't be going against government with the tax code changes but other large companies that put the complexity in there.
Apple themselves provided estimates in the subcommittee report about how much tax they'd avoided. Although the Irish subsidiaries are incorporated in Ireland, they are functionally managed in the US. The subs have no tax jurisdiction at all. The subcommittee was trying to clarify with Apple if the subsidiaries were managed in the US. They may find some legal argument or make an amendment to say that the legal tax jurisdiction of the subs is in the US in which case they are or will be liable for US taxation.
A flat 15% on repatriated capital and all other corporate income taxes would make a lot more sense. getting rid of all the loop holes would make those who are avoiding taxes through lobbying pay their share. The cost of bringing capital back would be cheaper than borrowing money at 3% for 6 years. Federal deficits would shrink further and capital investment in America would increase. The economy would expand and all Americans would benefit.
I don't get the 'get the money back into the US' either. It's an American company, probably spending all their R&D in the US and selling their products oversees. But they surely have costs oversees, B&M Stores, transport, manufacturing, everything; money spend oversees.
If they acquire money in those countries, wouldn't it be better to pay the bills with money acquired oversees? I am totally failing to see the reason to bring in all the money from oversees...for what exactly? They have money in the US as well, more than enough to pay the bills as their US stash is growing as well.
Quote:
Originally Posted by Frood
Senator: The senate and the incompetent laws we produced while I was a part of it are the problem.
This is just all looking more and more like a pretense to give these companies a 'tax holiday' or big break to get offshore money back into the US. It sounds great if you're willing to overlook that it is money that they didn't pay taxes on in the US in the first place.
You post almost makes sense until you realize "back into the US" is simply wrong because it implies the money has been to the US when this money has never been in the US. That is the issue many fail to realize. All this money has already been taxed once (sometimes just a small amount but much larger if include the billion in paid VAT) in the jurisdiction it was earned.
Quote:
Originally Posted by Marvin
It's companies that complicate the tax code in the first place by lobbying for the changes:
http://www.ft.com/cms/s/0/ee6c1b64-c1f2-11e2-ab66-00144feab7de.html
That is a warped view. Are you saying the companies go in and do the Yea/Nay votes in congress? This is 100% an legislative issue with 100% of the blame being the Congress of the US.