Apple and U.S. lawmakers in showdown over taxes and huge offshore cash stockpiling
Apple and US lawmakers are gearing up for a showdown over taxes — specifically how to deal with the huge stockpile of cash held by Apple and other multinational firms offshore.
A Senate panel has called Apple chief executive Tim Cook and others from the California tech giant to testify at a hearing Tuesday on “methods employed by multinational corporations to shift profits offshore.”
The hearing comes amid increased scrutiny on offshore holdings of big US corporations, which have hundreds of billions overseas but are reluctant to bring the funds home because they could be subject to a top tax rate of 35 percent.
Apple is in focus because of its $145 billion cash stockpile, much of it offshore. The company recently sold $17 billion in bonds to raise cash instead of repatriating profits, which would be taxed.
Cook told the Washington Post he will be offering his own proposal to lawmakers, which he argued would make it easier for Apple and other companies to repatriate offshore profits.
“If you look at it today, to repatriate cash to the US, you need to pay 35 percent of that cash. And that is a very high number,” Cook told the daily.
“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.”
Cook declined to offer specifics but indicated he would propose a “simplification” of the corporate tax code when he testifies.
Apple “likely is the largest corporate taxpayer in the US,” Cook said in the interview, estimating that the iPhone and iPad maker would pay $7 billion this year in income taxes.
In a separate interview with Politico, Cook sought to deflect criticism that Apple is shifting profits to escape taxation.
“Apple is contributing in a lot of different ways to the economy, and we’re very, very proud of it, particularly in the job-creation area and the work we do to protect our environment,” Cook said.
“I hope to make some clear recommendations, and I trust there will be receptive parties there.”
He added that the company is investing $100 million in US manufacturing, as it brings back some production of computers from overseas.
Tuesday’s hearing will also include Apple chief financial officer Peter Oppenheimer and its head of tax operations, Phillip Bullock, along with tax experts from Harvard and Villanova University, and officials from Treasury and the Internal Revenue Service.
“We’ve been working with the subcommittee to answer their questions about Apple, and we welcome any further questions they might have,” an Apple statement said.
“Apple is one of the largest taxpayers in the United States, having paid $6 billion in federal corporate income tax in fiscal 2012.”