Apple (AAPL) releases Tim Cook's official statement (.pdf) to the Senate ahead of his Tuesday...


Apple (AAPL) releases Tim Cook's official statement (.pdf) to the Senate ahead of his Tuesday appearance at a hearing on corporate tax payments. Among other things, Apple claims it paid ~$6B in federal taxes in FY12 and a 30.5% effective federal tax rate, and that its foreign units don't engage in the practices the hearing focuses on (the shifting of IP to offshore havens, revolving loans from subsidiaries, etc). The company proposes a tax system that's "revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings." (previous)

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Comments (43)
  • veloce49
    , contributor
    Comments (15) | Send Message
     
    For U.S. companies, foreign earnings should be taxed at a higher rate than domestic earnings. Aren't we supposed to be trying to bring jobs back the U.S.????????

     

    c.c. President Obama
    U.S. Congress
    20 May 2013, 04:14 PM Reply Like
  • MJ Pragmatist
    , contributor
    Comments (403) | Send Message
     
    Do you want even more corporations to leave the U.S.? If they move to a more business friendly country, taxes in places like China won't hit them so hard.
    20 May 2013, 04:56 PM Reply Like
  • rlbeard
    , contributor
    Comments (90) | Send Message
     
    you really need to study cause and affects better, the major problems in the US to retaining jobs are not wages, they are high taxes, regulations and union nonsense that doesn't allow a carpenter to pick up a board for example, kickbacks to politicians, The CEP of Cisco once stated that the cost of a facility built in the USA was approximately double that of most other countries due to these problems and that was before a income tax problem was 50 % higher. Our production per worker is much higher and wages are not the problem, our politicians and liberals (i.e. unions and green environment)are our problems. I know we don't want to pollute so why make regulations so burdensome we go to China and pollute 5X as much isn't it a global environment?? So the green agenda in the USA in reality is causing more global problems not less.
    20 May 2013, 05:09 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    Saying emissions control causes pollution is like saying that quitting smoking causes lung cancer.
    20 May 2013, 05:12 PM Reply Like
  • Mondego
    , contributor
    Comments (421) | Send Message
     
    I think the point he is trying to make Vegas Ben is if you can't party at your own house you are going to a friend's...so to speak. They will find a way to dodge restrictions/codes and taxes. Either way there is going to be pollution until the entire world abides by an effective standard of emissions control.
    20 May 2013, 05:36 PM Reply Like
  • Hammerhorn
    , contributor
    Comments (27) | Send Message
     
    Most of the save the planet ideas are lobbyist getting their unwanted product put into law. Happens all the time at all levels.
    21 May 2013, 01:45 AM Reply Like
  • Glenway Fripp
    , contributor
    Comments (1608) | Send Message
     
    The reason people all over the world are loosing their jobs isn't laws. It's robots! As machines do more of the tasks originally assigned to people our usefulness is undermined. This is one of the crisis of the day for everyone. What do we do now? How will wealth be distributed in a way that makes sense in a era where less human labor is required? This should be an era of wealth and leisure time for everybody. Isn't that why machines evolved? To make our live easier? Unfortunately instead the machines have concentrated wealth in the pockets of the owners of the machines and left a lot of people confused and disenfranchised.
    21 May 2013, 08:54 AM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    Well said, Apple!
    20 May 2013, 04:20 PM Reply Like
  • Doyle3000
    , contributor
    Comments (1954) | Send Message
     
    HAHAHAHA!! Good Luck Tim! I'm sure your logical, reasonable argument will help change the law.

     

    Oh wait, we live in a country where Congress has evolved to only be driven by 4 things:

     

    1) Being re-elected as many times as possible
    2) Catering to the people/corporations who finance their campaigns
    3) Working well with their lobbyist buddies with whom they used to work so they too can land cushy jobs on K Street
    4) Oppose anything the other party suggests, no matter how it benefits the citizens of the United States
    20 May 2013, 04:23 PM Reply Like
  • Glenway Fripp
    , contributor
    Comments (1608) | Send Message
     
    All correct except number two '
    2) 'Catering to the people/corporations who finance their campaigns'
    I believe this is a smoke screen and that our representatives' relationship with corporations is that they all have large stock portfolios and will make no decision that will adversely effect their personal wealth hence effect no publicly traded U.S.company adversely.All our representatives will only go so far to save America in so far as it doesn't effect their personal greed. They also have incredible insider information because they know in advance how new laws yet to be passed will effect their holdings. Since this behavior is true on both sides of the aisle the veracity of ,4) "Oppose anything the other party suggests, no matter how it benefits the citizens of the United States ", comes into question. Both sides of the aisle represent the same corporate interests that line their pockets and their political bickering may just be theater to put their idiotic debates front and center of the news cycle and further disguise a more sinister truth: The United States in not a democracy. It is a Corpocracy.
    21 May 2013, 08:40 AM Reply Like
  • rocback
    , contributor
    Comments (1098) | Send Message
     
    Apple pays over $6 billion a year in U S taxes and Samsung pays none. Apple, while employing minimum wage workers in China, pays more than 50% of its wages to designers, engineers and distributors in the U S. Apple makes as good or better phone than Samsung. So why would any patriotic American buy a Samsung phone over an Apple phone when the U S taxpayers already subsudize Samsung by defening tis homeland from N Korea while it steals out technology?
    20 May 2013, 04:32 PM Reply Like
  • darekz
    , contributor
    Comments (68) | Send Message
     
    Just a side note. Apple does NOT pay minimum wages in China (more correctly Foxconn). In fact Foxconn pays fairly high wages (at least twice the wages of a construction worker), provides free dormitories and food. Foxconn offers better working conditions than many Chinese companies do, and offers highly valued among Chinese workers opportunity to work overtime and make extra money. In reality working at Foxconn is so sought after that when Foxconn hires, lines are forming days in advance and up to horizon. If these were in fact minimum wages and so dreadful conditions that would clearly not be the case. Just a side thought
    21 May 2013, 02:26 AM Reply Like
  • srtmaster
    , contributor
    Comments (3) | Send Message
     
    Actually, Veloce49, AAPL should be taxed lower on domestic earnings than foreign earnings, thus giving them a reason to come back to the US or at least bringing the money back to the US. AAPL is now borrowing money to buy stuff in the US as a majority of their money is overseas. We need to give them an incentive to bring that money home. We don't need to raise their taxes and we probably could not dictate how much they pay on foreign profits anyway. That is why they leave the money overseas.
    20 May 2013, 04:34 PM Reply Like
  • stevesko
    , contributor
    Comments (63) | Send Message
     
    @Velco49, Making products overseas are expenses, not earnings. APPL generates earnings by making sales.Those off shore earnings are from off shore sales less expenses. If they made the product here, they would have higher net earnings overseas.
    20 May 2013, 04:51 PM Reply Like
  • Davidoff
    , contributor
    Comments (409) | Send Message
     
    It might surprise some people, but corporations aren't some extra-governemental entities without any State and allowed to do anything they want. They *should* obey the laws like any other small business does. Apple uses any possible loopholes, any existing tax shelter and fiscal heavens to optimize their taxes and thus to steal money, mainly from the US government, but not only. Some might say that everything that isn't illegal must be tolerated, however I doubt that Apple or any other multinational corporation should be encouraged and be proud of publicly evading taxes and moreover be invited with a red carpet to the Congress in order to expose what their vision of taxation would be. It's like watching Madoff talking about his vision of market regulation. The real economy is built on the small business. People who work in their country, who pay every penny, that they owe to the State and hire national workers without enslaving some Chinese students. But somehow, I doubt that an owner of some bookstore or some restaurant would be invited to the Congress, even though, these people might know much more about the business than some IT geek, whose only merit is to have been close to Steve Jobs. Apple is American only when it comes to its image, but it is certainly not American anymore when it comes to paying its fair share and I find it shameful, disrespectful and morally reprehensible.
    20 May 2013, 05:06 PM Reply Like
  • pocohonta
    , contributor
    Comments (661) | Send Message
     
    @Davidoff: there's a big difference between tax evasion and tax planning. Apple opted for proper tax planning to minimize tax and made NO attempt to evade tax. Even the foreign earnings that were already taxed by another country has an accompanying tax reserve earmarked in the event of repatriation.
    It's easy for people to assume the worse of Apple, and I'm sure the senate subcommittee is our there to find a scape-goat (so that they can tell their constituents that they're looking out for the little guys by bashing the big guys), but the fact remains that there was no tax evasion, and that Apple exercised its fiduciary duty to its shareholders by paying on the tax it is owed, no more and no less.

     

    I would be worried if any company that I am a shareholder of does not try its best to legally minimize its tax. It would be stupid not to. Of course, if you or any company you own wants to give more to uncle Sam than legally required, then go right ahead : )
    20 May 2013, 05:45 PM Reply Like
  • Davidoff
    , contributor
    Comments (409) | Send Message
     
    Pocahonta,

     

    It must be fun to believe in fairytales at your age... In the real world, what is called "tax planning" for multinationals is a plain and simple tax evasion for a common citizen. If any person would use the same shady schemes as the corporations do, that person would already be sitting in jail. People get prosecuted for much less than that. You can't "optimize" your taxes and pretend being completely rightful. Either you pay all your taxes, either you evade them. And excuse me, but pretending that Apple thinks about their shareholders by not paying their taxes is a complete nonsense.
    20 May 2013, 06:20 PM Reply Like
  • chabig
    , contributor
    Comments (656) | Send Message
     
    I assume you voluntarily opt not to deduct your mortgage interest. Am I right?
    20 May 2013, 07:33 PM Reply Like
  • Davidoff
    , contributor
    Comments (409) | Send Message
     
    Chabig,

     

    I don't live in the US, so I'm under a different fiscal system and I don't have any mortgage either. However, I'd like to bring to your attention that there is a huge difference between a fiscal deduction, that every citizen can use and that has been put in place by the Governement in order to boost the economy and a monstrous scheme, that Apple uses. Apple simply transfers its funds to Holland, then to Belgium and finally to Ireland in order to pay a scandalous and greedy 6% tax rate without benefiting to any economy and creating any jobs. Do you know anyone who'd pay 6% of taxes and would pretend that it's legal?
    20 May 2013, 07:58 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    Davidoff, who should they pay taxes to if they make the money in other countries? Should Samsung pay 35% taxes on any money that it makes outside of the United States? Or is it only American companies that should have to pay repatriation taxes, thus giving companies like Samsung a huge cash advantage?
    20 May 2013, 08:13 PM Reply Like
  • Davidoff
    , contributor
    Comments (409) | Send Message
     
    Apple and other corporations don't pay taxes anywhere. They don't pay taxes in the US nor in the EU. Repatriation is simply one side of the coin and since they don't pay taxes abroad it wouldn't kill them to pay taxes to bring the funds back to the US. It could hardly be considered as being a double taxation. Everyone pays taxes. Personally I pay 60% on my salary and 34% on my companies. So how comes that corporations shouldn't do the same? It's a plain greed and I just don't understand how anyone can defend them.
    20 May 2013, 08:39 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    There is a a pretty big difference between deferring taxes and not paying taxes. When the money is brought into the U.S., and it likely will be, they will pay taxes on it. However, they will likely wait until there is a "tax holiday" or some significant tax reform before they do it.

     

    The executives are making smart financial decisions, and if they didn't make smart financial decisions, they'd likely get fired and replaced with people who would.
    20 May 2013, 08:52 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    Also, Davidoff, I'd still love to hear about how you think companies like Apple and Samsung should be taxed in a way that doesn't give an unfair advantage to Samsung.
    20 May 2013, 08:56 PM Reply Like
  • freddayus
    , contributor
    Comments (21) | Send Message
     
    do you have anything useful to say? if you dont like living in a socialist country that taxes the bejesus out of everything then leave (is what businesses say to themselves)
    20 May 2013, 09:27 PM Reply Like
  • rocback
    , contributor
    Comments (1098) | Send Message
     
    Apple pays 30% not 6% in corporate taxes.
    20 May 2013, 09:54 PM Reply Like
  • MagnusFarmer
    , contributor
    Comments (7) | Send Message
     
    The beauty of Seeking Alpha is that the comments are usually well reasoned and educated responses. This is neither. Apple does obey the law and pays a ton of taxes on domestic earnings. "Loopholes" are nothing more than exceptions, exemptions or things the lawmakers decided wouldn't be taxed. There's nothing illegal about it. And the Chinese who are "enslaved" are people who had little to no better options than the factory work which is transformational for them. You can't apply western standards to understand their employment options. People too often judge based on opinion, prejudice and a general lack of fact. Please don't turn this site into Fox "News" or MSNBC. And "affect" should have been "effect".
    20 May 2013, 09:57 PM Reply Like
  • darekz
    , contributor
    Comments (68) | Send Message
     
    If such scheme is illegal then I am sure Apple would be fined, persecuted and a slew of people would end up in jail. Since that did not happen, it must be perfectly legal. If you like companies to stop going through such hoops to save bucks, perhaps stop blaming companies and start blaming the tax system that allows that, and better yet the creators of such tax system.
    21 May 2013, 02:35 AM Reply Like
  • Davidoff
    , contributor
    Comments (409) | Send Message
     
    Ben,

     

    Samsung works in a completely different environment. One huge family controls Samsung, LG, Huyndai, Kia (among others), the biggest Korean banks and is part of the Korean government. In other words, it's not how a democratic state should function. Samsung is going to be advantaged no matter what, cause they still work like if there were no anti-trust laws and like if there wasn't any conflict of interest notions.
    Moreover, you should know that the United States are a founder and a member of the WTO. An organization, that aims to prevent any unloyal move like the one, that you'd like to be applied, that would tend to advantage national corporations. So I don't think that any Government should advantage their own corporations in any way, as long as they are WTO members. I'd push instead countries like South Korea, China or Japan toward a more ethical business models.
    21 May 2013, 07:47 PM Reply Like
  • mr clark
    , contributor
    Comments (726) | Send Message
     
    tax the corporations, but even moreso, tax the corporate insiders and capital gains for stockholders - there needs to be someway to recoup this excess printing and stimulus
    the problem then is that its spent recklessly and criminally by the taxing authority

     

    ...
    20 May 2013, 05:09 PM Reply Like
  • citypound
    , contributor
    Comments (182) | Send Message
     
    This is political. Nothin' to it, but to do it...
    Any corporate tax should be at or below the worlds' average.
    Tax realized money made by individuals, the more $ made the higher their rate. Use the higher collected taxes to put people to work earn $, pay more taxes while fixing our infrastructure. Liquidity is not a problem if it's in the right hands. And we want lots of good new regulation, with incentives to clean the environment. But the 'stop all fracturing" at all costs folks will have to compromise and learn to get out in front and lead in these necessary new, sensible regulations, - not just gum up the works. Progress in environment & new gas energy must go hand in hand. And aapl? Apple is here to stay and someday $700 will not be the top price people pay for it.
    20 May 2013, 05:34 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (10084) | Send Message
     
    U.S has the highest corp tax rate in the world. Washington just doesn't get it. There needs to be a tax holiday to repatriate the trillions that are overseas. That money would have an immediate impact on our economy.

     

    I'm sure the boys and girls in Congress have their accountants shelter as much as they legally can. Or on second thought maybe they use the Charlie Rangel approach and just don't bother to pay .

     

    Gimme a break with this congressional grandstanding BS.
    20 May 2013, 06:01 PM Reply Like
  • investingInvestor
    , contributor
    Comments (2464) | Send Message
     
    US Corporate tax rate should max out at 15 to 25 percent, depending on the industry. Higher for polluting and natural resource extracting industries because they harm the future GDP. No tax breaks except the current R&D.

     

    Heck, make US Corporate tax rate fixed, depending on the industry.

     

    Whoops! I just scared most of the K Street lobbyists, I mean ex-Congresspeople.

     

    God, I do not like dealing with taxes.
    20 May 2013, 06:15 PM Reply Like
  • brentn
    , contributor
    Comments (55) | Send Message
     
    This Apple tax hearing reminds of how Microsoft's party came to an end. This isn't about doing what's best for the American people - it's pure grandstanding. Don't forget - Congress is supposed to modify the tax code more often than every 30 years. Think the world has changed since 1987?
    20 May 2013, 06:23 PM Reply Like
  • june1234
    , contributor
    Comments (4357) | Send Message
     
    Could there be a connection between gov. encouraging US corps to set up shop overseas for the last 25 yrs and the huge debts domestically?
    20 May 2013, 07:44 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    All the tax talk all over the internet is dragging down the stock price:
    After Hours: 439.62-3.31 (-0.75%)
    20 May 2013, 08:17 PM Reply Like
  • positivethoughts
    , contributor
    Comments (2064) | Send Message
     
    Scenario implied by the government:

     

    Apple profit that should of been exposed to taxes = $44 Billion
    Money that should have been collected in taxes = $15.4 Billion

     

    Reality Check:

     

    2014 Proposed Full Year Budget Spending = 3.8 Trillion
    Number of Days Apple's 'lost' tax revenue would pay for the cost of Federal government = 1.5 days

     

    That's right folks. All this hoopla and grandstanding, and even if everything were to go as planned, it would only cover the cost of the federal government for a little more than 1 day! If you factor in state and local spending and transfers, a possible tax payment by Apple wouldnt even cover the cost of all levels of government in the U.S. for even 1 day!

     

    It's all a scam folks. Anyone who argues for Republicans over Democrats or Democrats over Republicans - implying that there is a difference between the two parties - is either stupid or purposely supporting the status quo so as to ensure the destruction of the U.S., going forward.
    20 May 2013, 09:44 PM Reply Like
  • Slinger29
    , contributor
    Comments (15) | Send Message
     
    Because of Union restrictions and governmental taxes and regulations Apple and other corporations have 'fled' overseas to produce products, if produced in the USA would be so costly they wouldn't sell. Samsung uses cheap Asian labor and products to compete in the USA against Apple after copying their products. What taxes does Samsung pay? Meanwhile 60 thousand USA troops have protected South Korea for over 55 years. You folks are buying Samsung products while complaining about Apple?! Somebody here is not a patriotic American.
    20 May 2013, 09:52 PM Reply Like
  • RM13
    , contributor
    Comments (1205) | Send Message
     
    Well, than its the fault of US government not to negotiate payment from S Koreans for defending their homeland. It's easy - you pay us or we leave. Projection of force doesn't matter as much anymore as it used to..
    21 May 2013, 12:17 AM Reply Like
  • jrhdgs
    , contributor
    Comments (3) | Send Message
     
    I haven't read any comments relating to lower tax rates linked to job creation. I certainly hope that issue comes up at tomorrow's hearing.
    20 May 2013, 10:05 PM Reply Like
  • Vipertom
    , contributor
    Comments (169) | Send Message
     
    As if the tax code isn't complicated enough! We need to simplify the tax code, and encourage domestic corporate spending. Big government is out of control.
    20 May 2013, 11:46 PM Reply Like
  • darekz
    , contributor
    Comments (68) | Send Message
     
    The issue arises because US corporate tax rate is higher than in other countries so any company that repatriates profits to US would have to pay the tax on the differential. Uncle Sam counts on big take but in reality gets zilch because bigger tax on nothing (no profit repatriation) is less than a lower tax on something. It is clear that if Uncle Sam wants some of corporate America profits made overseas transferred back to US, it needs to lower tax rate or will never see these profits coming. If the US corporate tax was the same as say China, then tax issue would be not even a consideration in decision whether to bring profits to US or not. No bucks for Uncle Sam from a transfer in this case directly but there would be taxes indirectly from investment and resulting from it employment etc. If in present tax environment Apple decided to bring profits to US regardless, perhaps for "patriotic reasons" it would be perhaps patriotic but also would show blunt disregard for fiscal responsibility to Apple shareholders, and I bet the stock price would react accordingly...
    21 May 2013, 02:15 AM Reply Like
  • mweaver
    , contributor
    Comments (199) | Send Message
     
    apple is under no legal, moral, or ethical obligation
    to pay any more than they are required.
    apple is a private company, wholly owned by its
    shareholders. if congress and the political
    establishment inside the beltway find this to be
    an abomination, rewrite the tax code
    21 May 2013, 06:25 AM Reply Like
  • altaire4
    , contributor
    Comments (117) | Send Message
     
    Kudo's to APPLE CEO Tim Cook for his candor in front of the U.S. Senate committee on Corporate taxes and the need for Tax reform in the U.S. ! Cook was passionate about the need for Tax reform. Steve Jobs pick of Tim Cook to lead Apple is by far one of his best legacies !
    21 May 2013, 01:27 PM Reply Like
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