UPDATE, 11:08 AM: Apple‘s part of today’s proceedings is over after Sen. Carl Levin finally drew blood. He hammered CEO Tim Cook and other Apple execs for creating business arrangements that ensured that the company’s “crown jewels” — economic rights to more than two-thirds of its worldwide profits — “are in three Irish companies that you control and don’t pay taxes.” Cook acknowledged that he has “no current plan” to bring that cash “home at the current tax rate.” Levin noted that this was entirely Apple’s choice: The arrangement in Ireland was signed by “three people working for Apple.” He also observed that the company repatriates profits from Latin America and Canada but not elsewhere. “We cannot continue a system where a multinational company as phenomenally successful as you can make a decision as to where the profits are going to flow. An American company where the R&D is 95% in the United States. You had R&D tax credits, all the benefits of living in this country, [including] protection of patents….You made a unilateral decision where these profits are going to be taxed or not taxed. Folks, that is not right.”
PREVIOUS, 10:13 AM: Tim Cook seems to be in command so far in his appearance before the Senate’s Permanent Subcommittee on Investigations to defend Apple against charges that it parks cash overseas to avoid paying U.S. taxes. He began his testimony throwing down a gauntlet calling for “dramatic simplification” of U.S. corporate taxes. “Apple has always believed in the simple, not the complex,” he said adding that it should also apply to the tax code. He called for a revenue-neutral change that would lower corporate income tax rates and provide for “a reasonable tax”– which he said should be a single digit percentage — “that allows the free flow of capital back to the United States.” It would probably increase Apple’s U.S. taxes, he says, but “it would promote U.S. economic growth.” In response to questions from Sen. John McCain (R-Ariz.), the Apple CEO said that his company does “have a low tax rate outside the U.S. but this is for products that we sell outside the US, not within. There’s no shifting going on.” Sen. Claire McCaskill (D-Mo.) challenged Apple’s use of a holding company in Ireland where the company enjoys a less than 2% tax rate. That was offered by the government “as a part of recruiting us,” Cook said. Still, he added that he would not consider moving Apple’s headquarters abroad. “We’re an American company and we’re proud to be an American company…We’re there [in California] because we love it there.” The hearing began with Sen. Rand Paul (R-Ky.) calling on his colleagues to apologize for “bullying, berating and badgering one of America’s success stories. If anyone should be on trial here it should be Congress.” Chairman Carl Levin (D-Mich.) said that Paul can “apologize to anyone you wish …We did not drag [Apple] in front of this subcommittee.” Cook agreed saying that “it’s important that we tell our story and that [people] hear it from me.”
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