Apple CEO talks taxes ahead of hearing: 'We pay every dollar that we owe'
Tim Cook is going to Washington to talk taxes and overseas cash holdings, and the Apple CEO is heading to the hill with a message: We pay every dollar that we owe.
Cook will testify in front of the Senate Permanent Subcommittee on Investigation on Tuesday, and the Apple chief spoke with Politico ahead of the hearing. Cook defended Apple's conduct, saying that the iPhone maker is operating well within the rules with regard to taxes, referring to a a massive overseas cash hoard.
"I can tell you unequivocally," Cook said, "Apple does not funnel its domestic profits overseas. We don't do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe. And so I'd like to be really clear on that."
As of March 30, Apple held $102.3 billion in cash overseas, up 24 percent from the end of September 2012. The company cannot bring those funds back ashore without paying corporate taxes on them.
Apple's cash conundrum came to a head over the past few months, as investors ? dissatisfied with slowing revenue growth and a declining stock ? called for the company to turn some of its overseas holdings into a bigger dividend. Apple eventually circumvented the tax issue by taking on $17 billion in debt. That move, the firm's first bond offering since 1996, allowed apple to fund billions in cash returns to investors while avoiding the $9.2 billion it would have paid had it brought its overseas cash home.
Apple isn't alone among large corporations in keeping its money off American shores. A recent analysis found that Apple was holding about $40 billion in untaxed earnings in countries with a more favorable tax structure, such as Ireland. Google and Amazon are among the other tech giants that have done just the same for tax purposes.
Some of the senators before which Cook will find himself are quite ready to tear into Apple, even if the hearing is unlikely to result in any actionable legislative initiatives. Senator Carl Levin (D-Mich) called the entire tech industry to task for its tax avoidance, while Oklahoma's Sen. Tom Coburn (R) has previously said he was "livid" at Apple's tax actions.
Cook may parry such criticisms by pointing to Apple's impact on the American economy. The company employs 50,000 workers in all 50 states, and its actions have created another 550,000 jobs in manufacturing and software development. Cook will also likely note the company's $100 million investment in domestic manufacturing, with a U.S.-built Mac expected to roll off production lines this year.
In addition to the United States, Apple has come under fire in both Britain and Spain for practices that allow it to slip past tax regulations. A British report last year said that Apple pays about half the taxes it should by basing its operations out of Ireland.
A similar report from Spain's El Pa?s showed Apple routing 99 percent of its spanish sales through its Irish subsidiary. The iPad maker paid about 2.6 million euros in taxes for the year. Spanish Apple Store sales were up 86 percent.
Cook will testify in front of the Senate Permanent Subcommittee on Investigation on Tuesday, and the Apple chief spoke with Politico ahead of the hearing. Cook defended Apple's conduct, saying that the iPhone maker is operating well within the rules with regard to taxes, referring to a a massive overseas cash hoard.
"I can tell you unequivocally," Cook said, "Apple does not funnel its domestic profits overseas. We don't do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe. And so I'd like to be really clear on that."
As of March 30, Apple held $102.3 billion in cash overseas, up 24 percent from the end of September 2012. The company cannot bring those funds back ashore without paying corporate taxes on them.
Apple's cash conundrum came to a head over the past few months, as investors ? dissatisfied with slowing revenue growth and a declining stock ? called for the company to turn some of its overseas holdings into a bigger dividend. Apple eventually circumvented the tax issue by taking on $17 billion in debt. That move, the firm's first bond offering since 1996, allowed apple to fund billions in cash returns to investors while avoiding the $9.2 billion it would have paid had it brought its overseas cash home.
Apple isn't alone among large corporations in keeping its money off American shores. A recent analysis found that Apple was holding about $40 billion in untaxed earnings in countries with a more favorable tax structure, such as Ireland. Google and Amazon are among the other tech giants that have done just the same for tax purposes.
Some of the senators before which Cook will find himself are quite ready to tear into Apple, even if the hearing is unlikely to result in any actionable legislative initiatives. Senator Carl Levin (D-Mich) called the entire tech industry to task for its tax avoidance, while Oklahoma's Sen. Tom Coburn (R) has previously said he was "livid" at Apple's tax actions.
Cook may parry such criticisms by pointing to Apple's impact on the American economy. The company employs 50,000 workers in all 50 states, and its actions have created another 550,000 jobs in manufacturing and software development. Cook will also likely note the company's $100 million investment in domestic manufacturing, with a U.S.-built Mac expected to roll off production lines this year.
In addition to the United States, Apple has come under fire in both Britain and Spain for practices that allow it to slip past tax regulations. A British report last year said that Apple pays about half the taxes it should by basing its operations out of Ireland.
A similar report from Spain's El Pa?s showed Apple routing 99 percent of its spanish sales through its Irish subsidiary. The iPad maker paid about 2.6 million euros in taxes for the year. Spanish Apple Store sales were up 86 percent.
Comments
Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little. They used loopholes to pay dividends.
Now, I'm all for business and pro-business but this Apple corporate tax dodging highlights a big problem where average working people like me pay the most into the system
http://www.huffingtonpost.com/2012/04/17/apple-corporate-income-tax-rate_n_1429955.html
Give an accountant rules and he will find a way to maximize profits without breaking those rules. Change the rules and companies will change the way they do business.Apple is not unique.
Quote:
Originally Posted by eat@me
Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little. They used loopholes to pay dividends.
Now, I'm all for business and pro-business but this Apple corporate tax dodging highlights a big problem where average working people like me pay the most into the system
http://www.huffingtonpost.com/2012/04/17/apple-corporate-income-tax-rate_n_1429955.html
Your point? Every single major corporation will use every single loophole available, as long as it's legal. Its what they pay their legal and accounting teams to do. Any company that does not do so is negligent. Yet you want Apple to cripple itself willingly, and pay a higher share of taxes than other corporations..because? You want Apple to play by rules that no other corporation plays by, just to give more money away?
Oh, and I'm pretty sure you don't pay "the most"-whatever the hell that means. Apple one of the largest US corporate tax payers in existence. The US gvt gets BILLIONS annually in revenue from them.
So just to keep track with what's currently expected to Apple from analysts and investors- they need to sell MORE units, at CHEAPER prices, while making MORE profit, MORE margin, and paying MORE taxes. Got it.
Quote:
Originally Posted by eat@me
Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little. They used loopholes to pay dividends.
Now, I'm all for business and pro-business but this Apple corporate tax dodging highlights a big problem where average working people like me pay the most into the system
http://www.huffingtonpost.com/2012/04/17/apple-corporate-income-tax-rate_n_1429955.html
If you would have substituted "Many corporations" for "Apple" I might have taken your comment seriously, but you didn't so that makes you nothing more than an ignorant troll.
Originally Posted by Slurpy
Oh, and I'm pretty sure you don't pay "the most"-whatever the hell that means.
I think he means by way of percentage, not amount.
Quote:
Originally Posted by eat@me
Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little. They used loopholes to pay dividends.
Now, I'm all for business and pro-business but this Apple corporate tax dodging highlights a big problem where average working people like me pay the most into the system
http://www.huffingtonpost.com/2012/04/17/apple-corporate-income-tax-rate_n_1429955.html
Apple is doing nothing illegal. Don't like the way taxes are handled? Go to your elected official and make changes. Apple is one of the largest tax payers in the US. What TC did is essentially give the middle-finger to congress, and good for him.
Quote:
Originally Posted by AppleInsider
Apple isn't alone among large corporations in keeping its money off American shores.
But since it's Apple that makes it an abomination worth dragging the CEO in front some corrupt politicians so they can rail against the company.
Quote:
Originally Posted by lkrupp
But since it's Apple that makes it an abomination worth dragging the CEO in front some corrupt politicians so they can rail against the company.
You should at least wait to see what happens prior to passing such judgement. I'm sure at least highlights will be posted on here.
Quote:
Originally Posted by eat@me
Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little. They used loopholes to pay dividends.
Now, I'm all for business and pro-business but this Apple corporate tax dodging highlights a big problem where average working people like me pay the most into the system
Good for Apple (and its investors and its employees and its customers!)
While you use terms like "loophole" and "tax dodging" in the pejorative sense, I am quite sure Apple is following the law. They are doing their best to keep as much of the money they have earned as possible. Good for them! Every business and individual should do the same thing. Sadly there are not as many "loopholes" available to individuals.
From "The Firm":
Quote:
Avery Tolar: Do you think l'm talking about breaking the law?
Mitch McDeere: No, I'm just trying to figure out how far you want it bent.
Avery Tolar: As far as you can without breaking it.
Sounds reasonable to me.
Tim Cook:
Quote:
"If you look at it today, to repatriate cash to the U.S., you need to pay 35 percent of that cash. And that is a very high number," Cook said in an interview Thursday. "We are not proposing that it be zero. I know many of our peers believe that. But I don’t view that. But I think it has to be reasonable."
I'm not sure who in their right mind would not agree with this. 35% to repatriate is absolutely ridiculous. Corporations would have to be insane or suicidal to throw almost 40% of that money down the toilet for little to no benefit.
Apple is possibly the largest corporate taxpayer in the US. They're certainly "paying their dues".
Quote:
Originally Posted by Slurpy
I respect Cook for getting out there, taking the heat, and putting himself in the spotlight instead of getting another executive to do the talking.
I think he was called to testify.
Big fail in your logic.
Ultimately the consumer pays the taxes-period.
Raise the taxes on corporations and this cost is passed on in the price you and I pay. Corporations don't pay taxes you do, always have always will.
Quote:
Originally Posted by Slurpy
Corporations would have to be insane or suicidal to throw almost 40% of that money down the toilet for little to no benefit.
What do you mean no benefit? It might not be spent wisely but it would certainly buy quite a bit of health care or perhaps an antimissile installation.
Quote:
Originally Posted by mstone
What do you mean no benefit? It might not be spent wisely but it would certainly buy quite a bit of health care or perhaps an antimissile installation.
50,000 comedians out of work in this country and you're telling jokes.
Quote:
Originally Posted by rickag
Ultimately the consumer pays the taxes-period.
Raise the taxes on corporations and this cost is passed on in the price you and I pay. Corporations don't pay taxes you do, always have always will.
I don't understand this, but then I'm not an accountant.
If the corporation raises price of widget but their cost to produce widget is the same, they make more profit and consequently owe more taxes. Where is the part where the consumer pays the taxes?
Quote:
Originally Posted by lkrupp
But since it's Apple that makes it an abomination worth dragging the CEO in front some corrupt politicians so they can rail against the company.
I know, right…? A bunch of politicians, posturing to score political points with the "angry electorate", singles out ONE company to "Take to task" for following the tax guidelines that those same politicians THEMSELVES wrote into law?? Wha…?
Are the pols actually saying "the laws we wrote weren't INTENDED to be applied in this manner"? Well then, all they need to do is AMEND them, and the problem will be FIXED. Don't blame the COMPANY for following the rules that YOU create. It's a different matter if they are BREAKING the rules, but they aren't.
Hammering on the ONE company that actually pays substantial taxes at home, and is among the highest paying of any single corporation, period, and does so WITHOUT riding taxpayer funded subsidies or indebtedness to gain their success, is PANDERING to the basest kind of politics.
The last report I read, Apple pays over $6 BILLION in taxes, in one year. They would love to "repatriate" the funds they've earned overseas, paid taxes on overseas, and continue to invest overseas… but double-taxation at the highest corporate rate just isn't an acceptable "write off". They've been asking Congress to allow a reduced rate on large-cap 'repatriations', to account more completely for the taxes paid elsewhere already but Congress isn't budging.
Apple pays a substantial net tax rate (upwards of 25% or more on earnings?). Why should they be expected to pay ANOTHER 35% on top for money "brought home" from abroad? I agree with Apple on this one… lower the liability, and they'll take the hit. The current tax rates on "repatriation" are simply too high.