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He's proposing that U.S. rates be lowered

Apple CEO Tim Cook will appear before Congress this week to offer proposals regarding corporate tax laws. 

Cook, who is testifying for the first time this Tuesday, will present proposals that discuss companies bringing back foreign earnings to the United States. Furthermore, he's suggesting that this money be invested in research and development and creating jobs in the U.S. 

Large companies like Apple have come under fire for dodging heavy tax payments by profit shifting. For example, Apple made an estimated £6B ($9.50B USD) in Britain last year, but paid only £10M ($15.8M USD) in taxes.  Apple was able to do this because of the British tax code's rule that largely exempts companies based in Ireland from paying British taxes.

In April 2012, The New York Times accused Apple of dodging millions of dollars in taxes in California and 20 other U.S. states (and dodging billions of dollars in taxes worldwide) by routing its money through other locations. Even though Apple is based in Cupertino, California, it put an office in Reno, Nevada which allows Apple to escape California's 8.84 percent tax rate for Nevada's 0 percent. Apple has also sold digital content from low-tax countries anywhere around the world, and has used the "Double Irish With a Dutch Sandwich," which allows Apple to cut taxes by directing profits through low-cost Irish subsidiaries, the Netherlands and the Caribbean.

Aside from that, Apple manufactures its iPads, iPhones and iPods in China -- as many electronics companies do. 


But Apple isn't alone in doing this. Google recently came under fire for dodging about $1.6 billion USD (£1 billion) in taxes by way of the island Bermuda. Google sent £6 billion through Bermuda over the course of last year, which halved its 2011 tax bill. In fact, Google funneled 80 percent of its global revenue through the island and ended up paying about £1 billion less to the government.

Now, U.S. Congress is having a Senate hearing Tuesday to talk about companies that shift profits overseas in an effort to skip large tax bills -- and Cook will be there to share his thoughts.

“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. “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.”

A JPMorgan report said over 1,000 U.S. companies keep $1.7 trillion in earnings over seas. 

Source: The Washington Post





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