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Senators Grill Apple Executives About Tax Strategy
The National Law Journal
A day after a congressional panel claimed that Apple Inc. uses offshore entities to avoid U.S. taxes, senators on Tuesday grilled the company's chief executive officer and two colleagues about their tax strategy.
Testifying before the U.S. Senate Homeland Security and Governmental Affairs investigations subcommittee, Apple CEO Tim Cook, chief financial officer Peter Oppenheimer and tax chief Phillip Bullock insisted their company isn't skirting U.S. laws and is the biggest corporate taxpayer in the United States, paying $6 billion in taxes last year.
The executives disputed the panel's claims that Apple used Irish subsidiaries between 2009 and 2012 to protect $74 billion in profits from a 35 percent U.S. corporate tax rate. The panel estimated that Apple saved itself from $9 billion in U.S. taxes through its operations in Ireland, where the company is subject to a tax rate of 2 percent or less.
Cook defended the practice, saying Apple products sold outside the United States make up the profits in Ireland.
"Honestly speaking, I don't see it as being unfair," he said. "I'm not an unfair person. That's not who we are as a company or who I am as an individual."
Senator Carl Levin (D-Mich.), the panel's chairman, had another opinion.
"Apple is a great company," he said. "But no company…should be able to determine how much it's going to pay in taxes, how many profits they're going to keep offshore [and] how they're going to bring them back home using all kinds of gimmicks to avoid paying the taxes that should be paid to this country."
Not all senators had concerns with Apple, however. Senator Rand Paul (R-Ky.) chastised Levin for calling the hearing, saying the panel is "bullying, berating and badgering one of America's greatest success stories." He said the tax code that Congress created is the problem.
"I'm offended by the spectacle of dragging in executives from an American company that is not doing anything illegal," Paul said.
Cook said he hadn't been "dragged" to the hearing, but came to make the case for tax reform.
"I feel very good to be participating in this," Cook said. "I hope to help the process."