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Apple: The new "corporate bad guy" or is the Senate "bullying" Apple?

POSTED BY: NIKI2
UPDATED: Tuesday, May 21, 2013 07:59
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Tuesday, May 21, 2013 7:59 AM

NIKI2

Gettin' old, but still a hippie at heart...


Quote:

Apple's CEO is disputing assertions by a Senate panel that the company avoids billions of dollars in U.S. taxes by shifting profits to foreign affiliates.

Tim Cook testified at a hearing Tuesday by the Senate Permanent Subcommittee on Investigations, which released a report Monday attacking Apple's tax practices.

"We pay all the taxes we owe -- every single dollar," Cook said. "We don't depend on tax gimmicks."

The subcommittee's report estimates that Apple avoided at least $3.5 billion in U.S. federal taxes in 2011 and $9 billion in 2012 by using its tax strategy, and described a complex setup involving Irish subsidiaries as being a key element of this strategy.

Like other multinationals, Apple chooses to keep cash overseas so as not to pay the U.S. corporate tax rate. Apple is holding overseas $102 billion of its total $145 billion in cash.

Apple's use of loopholes in the U.S. tax code is unique among multinational corporations.

Apple uses five companies located in Ireland to carry out its tax strategy, according to the report. The companies are located at the same address in Cork, Ireland, and they share members of their boards of directors. While all five companies were incorporated in Ireland, only two of them also have tax residency in that country. That means the other three aren't legally required to pay taxes in Ireland because they aren't managed or controlled in that country, in Apple's view.

The report says Apple capitalizes on a difference between U.S. and Irish rules regarding tax residency. In Ireland, a company must be managed and controlled in the country to be a tax resident. Under U.S. law, a company is a tax resident of the country in which it was established. Therefore, the Apple companies aren't tax residents of Ireland nor of the U.S., since they weren't incorporated in the U.S., in Apple's view.

"Apple is exploiting an absurdity," Sen. Carl Levin said at the start of the hearing.

The subcommittee also has examined the tax strategies of Microsoft Corp., Hewlett-Packard Co. and other multinational companies, finding that they too have avoided billions in U.S. taxes by shifting profits offshore and exploiting weak, ambiguous sections of the tax code. Microsoft has used "aggressive" transactions to shift assets to subsidiaries in Puerto Rico, Ireland and Singapore, in part to avoid taxes. HP has used complex offshore loan transactions worth billions while using the money to run its U.S. operations, according to the panel.

Levin and McCain are proposing legislation to close loopholes in the tax code. More at http://www.ctvnews.ca/business/apple-ceo-tim-cook-talks-tax-strategy-a
fter-report-company-avoids-paying-billions-1.1289951#ixzz2TwysAuha


or is it
Quote:

Rand Paul thinks Senate is 'bullying' Apple Inc.

He complained that instead of celebrating the firm’s success, senators were “dragging in” Apple executives and berating them.

“Apple has done more to enrich people’s lives than politicians will ever do,” said the Kentucky lawmaker, a favorite of the tea party. “To the Apple executives here I apologize for this theater of the absurd.”

Paul’s rant sent a jolt of tension through a session that otherwise was focused on what many lawmakers perceived as Apple’s use of tax gimmicks.

Many senators expressed outrage at Apple using overseas subsidiaries to avoid taxes at a time when the government is struggling to reduce the federal deficit.

Sen. John McCain (R) of Arizona began his statement praising Apple for creating great products. But he decried Apple’s “scheme” to avoid taxation.

“In my view, loopholes like these are harmful in that they allow large corporations huge advantages over domestic companies, who can’t use overseas corporations to lower their domestic burdens,” said Senator McCain. “The American people will not tolerate it. Our tax system is broken and not modern, but I won’t let that excuse be used by Apple to explain why it’s OK for companies to not pay what they owe.” http://www.csmonitor.com/USA/DC-Decoder/Decoder-Wire/2013/0521/Why-Ran
d-Paul-thinks-Senate-is-bullying-Apple-Inc?nav=87-frontpage-entryNineItem


Additionally, "Sen. John McCain of Arizona, the subcommittee's senior Republican, condemned Paul's remarks as "offensive" for accusing Levin of bullying Apple executives." (first cite)

You decide. Obviously the solution is to fix our absurd tax system, I think everyone can agree on that much. But beyond that...?

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