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Apple CEO Tim Cook  (Source: rack.0.mshcdn.com)
The testimony has been prepared for Cook's appearance before the U.S. Senate tomorrow

Apple CEO Tim Cook's testimony on corporate tax laws has been made available on the Web just one day before he is expected to appear before the U.S. Senate.  

The PDF of Cook's statement aims to defend the way Apple pays taxes and offer suggestions for a revenue-neutral reform that brings foreign profits (made by U.S. companies) back to the U.S. 

The statement opens with an explanation of how Apple employs tens of thousands of U.S. citizens, and has paid "an extraordinary amount" of taxes in the U.S. According to the PDF, Apple paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.

Apple, a California company, employs tens of thousands of Americans, creates revolutionary products that improve the lives of tens of millions of Americans, and pays billions of dollars annually to the US Treasury in corporate income and payroll taxes. Apple’s shareholders – from individuals and institutions to pension funds and public employee retirement systems – have benefitted from the Company’s success through the appreciation of its stock price and generous dividends. Apple safeguards the capital entrusted to it by its shareholders with prudent management that reflects the Company’s extensive international operations. Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad.

The testimony continues on to say that Apple doesn't use tax gimmicks and even describes (at length) the history of Apple. It says that Apple supports a simplification of the tax code, even if that leads to an increase in Apple’s overall corporate taxes. Apple went on to say that the current corporate tax system “applies industrial era concepts to a digital economy” and “undermines U.S. competitiveness."

The testimony goes into other specifics, such as Apple's how Apple accounts for U.S. profits, how research and developments costs are shared with its Irish subsidiary, etc. 

The Irish subsidiary is an important topic because of an attack from The New York Times last year. In April 2012, NYT 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. 

What does Apple want? A tax system that is "revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings that allows free movement of capital back to the US."

The Senate also released a part of its investigation today, which claims that Apple’s system of subsidiaries has allowed it to dodge $44 billion in U.S. taxes over the last four years. But the Senate also mentioned that Apple did not break any U.S. laws.

Cook and CFO Peter Oppenheimer will appear in front of the U.S. Senate Permanent Subcommittee on Investigation at 9:30 a.m. EST on May 21, 2013. The hearing is titled "Offshore Profit Shifting and the U.S. Tax Code - Part 2" and concerns corporate tax laws and profit shifting. 

The entire PDF can be read here

Source: Apple



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RE: If it's true
By LongTimePCUser on 5/21/2013 11:39:53 AM , Rating: 2
You said:
" Lets say a $100,000 chunk of profit at a company. That company made 100k profit and paid tax on it. They then took what was left of that money and paid your paycheck and then you paid tax on that."

That is not the way the tax codes work.
The salary they paid to you was an expense to them and reduces their taxable income.

It is true that the dividends they might have paid to share holders is not deductible and comes from their net income after they have paid their taxes. That is the rationale for taxing dividends at 15% and not as ordinary income. The idea is that the money was already taxed.

Of course, in the strange world of Apple, until recently, they have chosen not to pay dividends to shareholders. Probably because dividends came from after tax income.


RE: If it's true
By retrospooty on 5/21/2013 12:02:30 PM , Rating: 2
Reducing taxable income isnt "tax free", its just less. Its like a deduction in personal income tax terms. If I make $100,000 this year and get 2x $5000 deductions for my 2 kids I then pay tax on $90,000. I know the corp. Tax codes are complex as all hell, but they do pay for the most part, unless "loopholed" out, which is a different corruption altogether.


RE: If it's true
By Mint on 5/21/2013 6:32:52 PM , Rating: 2
Your other post shows that you have a poor understanding of taxation.

For the sake of simplicity, let's assume a company has only labor costs, pays a net 20% tax rate, and employees pay 20% net tax. If a company has $10M in revenue and pays $8M in wages, it has an income of $2M and pays $400k to the gov't in corporate tax, while the employees collectively pay $1.6M in income tax. If the company only payed $6M to employees on the same revenue, it'd pay $800k tax while employees pay $1.2M tax.

Either way, the gov't gets $2M tax on 10M revenue. There's no tax upon tax, and companies don't pay employees with after tax profits like you implied.


“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads














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