Apple CEO Tim Cook and CFO Peter Oppenheimer testified in front of the Senate Committee on Tax Strategies today, and MacTrast has the highlights of their opening comments, and also comments made by others involved in the hearing.
Senator Carl Levin (D-MI), chairman of the U.S. Senate Permanent Subcommittee on Investigation, read a prepared statement that accused Apple of evading billions of dollars in taxes through subsidiaries in Ireland and elsewhere. Senator Levin also noted that he is an iPhone owner.
Levin said domestic companies that are not in a position to offshore their tax burden are at a competitive disadvantage, and accused Apple of being partially responsible for the sequester and other budget cuts because of its tax avoidance strategies.
He went on to say that Congress should close the tax loopholes that companies like Apple use, even if they don’t pass a rework of the overall corporate tax system.
Senator John McCain (R-AZ) then gave an opening statement. “It’s important all of us make it very clear the admiration we hold for Apple.” However, the company is taking advantage of a system that allows profits to be shifted and allows the company to avoid paying taxes on $44 billion in income over the past 6 years. “It’s completely outrageous that Apple has avoided paying US taxes and indeed avoided paying taxes around the world with its convoluted and pernicious strategies.”
McCain continued, “Our military can not afford it, our economy can not endure it, and the American people will not tolerate it. Our tax system is broken but that is not an excuse.”
Rand Paul (R-KY) then spoke, saying he was “offended” by the hearing. “Tell me a politician who is up here and doesn’t try to minimize his taxes… Tell me what Apple has done is illegal. I am offended by a government… that convenes a hearing to bully one of America’s greatest success stories… If anyone should be on trial here, it should be Congress. I frankly think the committee should apologize to Apple.”
Paul then stated that he had a bill that would tax repatriated money at 5% and target that money to infrastructure.
Apple CEO Tim Cook’s opening remarks led off by remarking on Apple’s pride in being an American-born company that paid $6 billion dollars to the U.S. Treasury last year, contributed billions of dollars to the U.S. economy, and that has directly or indirectly been responsible for the creation of 600,000 American jobs.
“Apple has real operations in real places with Apple employees selling real products to real customers,” Cook said. “We pay all of the taxes we owe — every single dollar. We not only comply with the laws, but we comply with the spirit of the laws.”
“We’ve invested billions in the U.S. to create even more American jobs. We’re investing $100 million jobs to create a line of Macs in the U.S. later this year. This will be assembled in Texas, and rely on equipment and supplies from other states.”
“We’ve invested a huge new data center in North Carolina, building more in Oregon and Nevada, a new campus in Texas and a brand new headquarters in Cupertino.”
“We are a company of strong values. We believe our extraordinary success brings increased responsibilities to the communities where we live, build and sell our products. We believe in President Kennedy’s phrase ‘to whom much is given, much is required.’ Apple is a champion of human rights, education and the environment. Our belief that innovation should serve humanity’s deepest values and highest aspirations is not going to change.”
Cook closed his opening remarks by saying: “Apple has always believed in the simple, not the complex. You can see this in our products and in the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. We make this recommendation with our eyes wide open, fully recognizing that this would likely result in an increase in Apple’s U.S. taxes. We strongly believe that such reform would be fair to all taxpayers and would keep the U.S. competitive.”
We could continue, but you get the idea. I’d like to thank the folks at MacRumors for the quotes above, their full transcript of the hearing, including follow up questioning after the opening remarks, is available at their website. [DIRECT LINK]