Apple CEO Tim Cook answers corporate tax questions before Senate committee
posted by Maxwell R. / May 21, 2013, 9:13 PM
No US based multi-national company, not Apple, not Google, not Exxon-Mobile, pays US income taxes on revenues earned overseas as long as that money remains overseas. That does not mean all is equal elsewhere in the tax code however. Apple, and other companies, still paid the requisite taxes on earnings sourced within the US.
In what can described as an exercise in futility, no one in the Senate accused Apple of any wrongdoing, as it is Congress that writes the tax code in the first place and so if there is any blame to place it is right there with all the legislators. That did not stop the Senators on both sides of the political spectrum from describing Apple as an “egregious offender” in terms of trying to avoid taxes. It was Mr. Cook’s first time testifying on Capitol Hill.
For his part, Mr. Cook noted that Apple’s overseas operations operate within the confines of the applicable laws of their host nations. Ireland has attractive tax laws for companies to operate there, and is very liberal with how companies may consider themselves residents of that country (or not). “Apple welcomes an objective examination of the US corporate tax system, which has not kept pace with the advent of of the digital age and the rapidly changing global economy,” according to a company statement. In plain talk, that means that the US tax code is punitive across the board. The United States has the highest corporate tax rate in the world.
Apple’s revenues topped $156 billion for its fiscal year ending September 2012. After expenses it paid about $14 billion on $55 billion income, about a 25% effective income tax rate, leaving the computer maker with an overall 26% profit margin. Not bad all things considered. The reality is however, that the tax code discourages companies from repatriating earnings made overseas. In fact, the code is so repressive that Apple is better off borrowing money to pay dividends and buy back stock than it is to access its treasure chest of over $100 billion in cash which is outside the United States.
So remember, before you feel that apparent warmth of social justice welling over you, more likely than not, that was just hot air coming out of a panel of politicians trying to make themselves look good.
sources: The Wall Street Journal, Associated Press
Posts: 222; Member since: Oct 31, 2010
posted on May 21, 2013, 9:15 PM 1
The us isn't dumb enough to mess with a company who's wallets are fatter than the egos running the nation.
posted on May 22, 2013, 8:01 AM 2
Posts: 230; Member since: Aug 14, 2012
so does google
posted on May 21, 2013, 9:20 PM 7
Posts: 456; Member since: Aug 16, 2012
You know...you 're right . ..a lot of multinational companies here in the u.s are guilty of this whole tax scheme. But I'm biased so I love when apple is in the spotlight for something negative
posted on May 21, 2013, 9:34 PM 6
Posts: 1835; Member since: Nov 22, 2011
They aren't guilty of any tax "scheme", and I hate apple. They work within the confines of the law. The problem isn't the company, it is our stupid tax system. Get rid of stupid income taxes and go to a excise only system, then no one can escape taxes. Not drug dealers, pimps, wh0r3s, corporate multinational companies, NO ONE. It is the best system, and was the best when our founders decided it was all the new country need 2.5 century ago. It's time to start realizing it is our idiot *permanent*, notice the article, politicians that are the ones really screwing us. I'm sure, like usual, I'll get thumbed down. But Max was right, there is no "social" justice in the stupid system. It just makes people feel like they are doing something.
posted on May 21, 2013, 9:44 PM 10
Posts: 498; Member since: May 21, 2013
It would make bloody sense that the prolific and objective "news writers" of this blog would wait until almost midnight to post this story. Perhaps, so as not to irritate the oh so sensitive ears and hearts of their iPhone base which includes the lot of them anyway. This is true reporting at its' very objective best [not].
posted on May 21, 2013, 10:24 PM 0
"The US has the highest corporate tax rate in the world." Yet, the author didn't find it important enough to mention that through loopholes, 57% of them pay $0 in income taxes. Every phonearena reader pays more taxes than GE. Yet, companies like Apple have enjoyed the benefits of all the tax money that went to DARPA to create the internet. It's fitting the author's next article is titled "Pure Android version of Samsung Galaxy S4 will BE INITIALLY ONLY BE available in the US."
posted on May 21, 2013, 11:19 PM 1
Posts: 154; Member since: Mar 05, 2012
the "loophole" you are talking about are but in place by the government. Some of these, like green energy deduction, domestic manufacturing deductions and research and development credits, etc... so if you want to blame anyone, blame the government. GE is great friends with the government, they go after ever new deduction, but is that GE fault or the one feeding them (government)?
posted on May 21, 2013, 11:45 PM 0
Posts: 47; Member since: Nov 05, 2012
What companies like Apple and GE do is they set up small little "Business HQs" in places like Ireland, the Cayman Islands, and what not to avoid taxes. So I can make billions overseas and not pay a dime in taxes because I name the entity that "ownes" the product is some little PO Box in Bermuda. Now here is the bulls**t part. If you and I go outside of this country and make tons of money in say the Middle East. The minute we come back to the US we have to claim all the money we made and get taxed on it. We know our Corporations are making a killing overseas and yet they can say "Ugh... we do not like the tax rate... lower the % rate and we will bring back that money to slather our investors and executives in cash..." What is sad is when the US was founded it was founded with the idea that Business would be taxed. In the advent of major corporations it was THEY who lobbied the US government to reduce the Capital Gains tax and substitute it by keeping the Income tax that Lincoln imposed due to the Civil War. If we went back to the way we are supposed to be taxed there would be no income tax and corporations would be paying their taxes whether they like it or not.
posted on May 23, 2013, 9:03 AM 0
Posts: 433; Member since: Apr 15, 2010
Al Gore created the internet...geez... The ARPANet was created with national defense in mind when looking at ways ot maintain communication while the landscape was smoking nuclear hole in the ground. Commercialization grew from University work thereafter. Infrastructure was futher built by the phone companies who own their own facilities. Your stat about 57% paying no income tax is false also. Go back to your CurrenTV if you can stand that Gore sold it to oil barrons from Qatar by way of Aljazeera.
posted on May 22, 2013, 1:39 AM 0
Posts: 154; Member since: Mar 05, 2012
this is a really well written article. as much as i hate apple, i have to agree with apple (if they paid the taxes own to countries where they earned their income). keep in mind, all these company are not "hiding" money from our greedy government by not repatriating money (bring money earned outside the country back), because they would had already paid taxes owned to where the income was earned. for example, if they sell a icrap in UK, they have to pay a percentage of that to the UK in terms of taxes. then when they want to bring that money back (after the UK tax), they get tax again by US? that make no senses...... why do they owe the IRS any money if the transaction was not in the US?????? theres is billions and billions of these dollars oversea because the government is too freaking greedy and want money where they did not earned.
posted on May 21, 2013, 11:30 PM 1
Posts: 339; Member since: Mar 16, 2013
Maybe the US should do something similar like the Australian government does and thats when you bring overseas earnings back home, any tax paid to any overseas government is given back to you as a tax credit and then you pay your normal tax. So it works out like you never paid any foreign tax, just your normal Australian tax.
posted on May 22, 2013, 1:50 AM 0
Posts: 47; Member since: Nov 05, 2012
why shouldn't we tax them on their foriegn proceeds? In 2005 corporations got to "repatriate" their cash at a 5% tax rate. They claimed they would use the money to make more jobs and invest back into their businesses. Instead they dumped the cash into their stocks (investors) and used the cash to pay HUGE bonuses to their executives. None of the cash created jobs... nor did it increase R&D work.
posted on May 23, 2013, 9:07 AM 0
Posts: 75; Member since: Apr 26, 2012
Its funny how some people are writing "i hate apple" so they are not called apple fanboys :-D
posted on May 22, 2013, 1:29 AM 1
Posts: 1827; Member since: Aug 27, 2009
Apple is following the US tax law. If the gov't wants to earn tax revenue from corporations, close the tax loop holes. But congress works for big business, so this "hearing" is just a sound byte, which will go nowhere.
posted on May 22, 2013, 9:26 AM 0
Send a warning to post author
Send a warning to Selected user.
The user has 0 warnings currently.
Next warning will result in ban!
Ban user and delete all posts
Message to PhoneArena moderator (optional):