Apple's Tim Cook to propose tax changes to Congress

Apple's Tim Cook to propose tax changes to Congress

Summary: Is the tax rate on money brought in to the United States deterring businesses from investment and expansion?

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TOPICS: Apple, Government US
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Apple CEO Tim Cook plans to propose tax changes in the U.S. to encourage companies to bring money company cash funds back to the country.

According to The Washington Post, Cook believes that the 35 percent tax rate on funds brought back to American soil is a "very high number." The CEO commented:

"We are not proposing that it be zero. I know many of our peers believe that. But I don't view that. But I think it has to be reasonable."

The Apple executive will be facing congressional queries on the iPad and iPhone maker's overseas cash deposits and tax bills next week. Microsoft and Hewlett-Packard have also faced U.S. government questions over practices of keeping large offshore funds in order to lower tax bills.

Apple paid $6 billion in federal corporate income tax in 2012's fiscal year, and is on track to pay $7 billion in FY2013.

Cook plans to propose tax changes at the Senate hearing in order to encourage companies to bring offshore money home for investment in the United States, and to help promote job creation and research & development. The Apple CEO wants a "dramatic simplification" of corporate tax laws, with lower rates for businesses. However, with so many ways available for firms worldwide to side-step taxes, it remains to be seen whether lowering corporate rates will make a difference.

In the U.K. on Thursday, Google was accused of "devious" and "unethical" behaviour at a tax hearing. The search engine giant only paid 1.5 percent in FY2011 by keeping its base of operations outside of the country, even though the U.K. stipulates a tax rate of 28 percent.

According to a JPMorgan report, over 1,000 U.S.-based companies hold an estimated $1.7 trillion in cash overseas.

Topics: Apple, Government US

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  • Better solution: pay the tax

    We wouldn't allow known criminals to write laws and decide punishments. For the same reasons, we shouldn't allow tax-evading corporations like Apple to write the tax rules.

    Tax rules do need changing. They need to be tightened, and enforcement must become more proactive, because companies like Apple are taking the ****. Apple and Google, for example, are engaged in deliberate and gross tax-avoidance, facilitated by willful deception and unethical conduct.
    Tim Acheson
    • Why in the world would you want the US government to get any of that money?

      They've repeatedly proven themselves to have the worst stewardship over collected revenues of anyone. They'd just completely waste it. They already have more than enough to do their job if they'd just spend what they have on the things they should be spending it on. Apple would do a much better job of spending their own money. We'd actually see something useful come of it.
      Johnny Vegas
      • How incredibly sad...

        ...the extent to which the average American citizen will support/endorse/vote for policies directly and diametrically opposed to their own interest.

        Why would you want the US government to get any of that money?

        First, because they're owed it. That's why. It's a total scam how corporations shelter money off-shore. They "create" a separate company, transfer assets and IP to that company, and then have the new company license their own properties back to them. In the process, they get to claim usage of their own assets as a business expense. You or I would be audited, fined and potentially jailed for such shenanigans.

        Second, because it's only fair corporations pay their share of taxes. The US government, and the US population, has created the environment in which these corporations can prosper. This country *could* be socialist, communist or any other form of government that wouldn't allow such economic freedom. But it's not. It's capitalistic. It's the height of hypocrisy to benefit, as these corporations do, from the economic conditions and turn around and refuse to pay the established taxes that support those very conditions.

        Third, because if they don't pay it, guess who will? You and me. The government is going to get their money one way or another, and every penny they don't get from corporations comes out of your and my paychecks or through the gutting of vital public services like the maintenance of roads, infrastructure and, yes, even social services like unemployment and social security.

        Do you need any more reasons, or do you still think poor Tim Cook, who receives north of $300 MILLION in total compensation EACH AND EVERY YEAR is going to go hungry if his company pays the established taxes?

        Just amazing how the 99.7% fights for the benefit of the 0.3%.
        PC987
        • Sadly, PC987's Pathalogical Greed is Normal.

          I suppose that attitude shouldn't surprise me when most politicians and their "useful innocents" are incessantly telling the majority that they have a right to the minority's money; and if you vote for them, they will take from the rich and give to you. Since this is a key platform for the Democrats, I suspect they have purchased your vote for life. The Republicans tell a somewhat different set of lies to buy votes... but once in power, their actions are nearly indistinguishable without a (D) or a (R) next to their title.

          As for who owes who what, the rich do not "owe" any more to the rest of us. If you genuinely believe that the top 10% paying 70% of income taxes means THEY owe US... you are in dire need of remedial math. But that is on their personal income… corporate taxes are paid for by the customer. Tim Cook is going to get his >$300 million no matter what the corporate tax is.

          You see, "corporations" are legal entities set up to temporarily handle assets, income and expenses for groups of people. Demanding that corporations pay ANY tax is simply another subterfuge of the political class to force people to pay taxes multiple times on each transaction. Taxes on corporations are operating expenses like printer toner or electricity… and that expense will be passed on to the customer, down to the last penny.

          So, how about the US government stop spending trillions of dollars and thousands of lives on fighting wars that they don't need to be fighting? How about they stop spending trillions of dollars and destroying millions of lives in a grotesquely self-mutilating "War on Drugs" that does more harm in any given year than drugs themselves could do in a hundred? How about they stop funneling trillions of dollars into economy destroying crony capitalist friends and contributors?

          Maybe if the political class stops doing all of the horrible things that they shouldn't be doing in the first place... you can stop indignantly insisting that customers pay more for products?
          jcrjohnson
          • Corporations are rarely temporary

            Often, they outlive their founders.

            But if you think that corporations are ill treated, you could do business in your own name.
            John L. Ries
          • Personally...

            ...I think that corporations should be required to establish their headquarters in the jurisdictions in which they are incorporated. I don't think there's enough office space in Delaware to accommodate all of the corporations chartered there, but that's not really my concern.

            By the same token, I think it should be the job of the Liberian navy (is there one?) to defend Liberian-registered vessels from piracy.
            John L. Ries
          • You're hilarious.

            I just love how you've directed your reply at me, and yet you don't actually respond specifically to any of the points I made. I won't be the presumptuous asshole that you are, and will respond to your points specifically.

            First: My greed? What greed is that? I'm greedy for taking the position that people and "entities" should pay their fair share to support the country in which they live and/or operate?

            Second: As for the top 10% paying 70% of the taxes, the detail you, and those who share your opinion, always leave out is the actual percent of their income that constitutes. The countless ways in which the wealthy are able and allowed to shelter their income means that, by and large, they pay a fraction of the tax rate the rest of us do. Warren Buffet clearly stated that he pays a smaller percent of his income in tax than does his secretary (or house keeper or whatever it was). The point being the wealthy absolutely DO NOT pay the same percent of their income as do the rest of us, and so if they're STILL making up 70% if the tax revenues of the country as a whole, that's a rather stark comment on the staggering amount of money they're making.

            Third: Don't patronize me with a definition of what a corporation is, especially one as simplistic and non-applicable to our modern economic system as the one you proffered. There's the original legal definition, and then there's the current "in practice" realities of what corporations are and why they exist. Not least among these is the insulation from liability of those operating them. Have any of the operators of BP been held liable for the deaths resulting from the explosion of their oil rig? Have any of them been held personally responsible for all the economic and environmental damage caused? Have any of the operators of the tobacco companies been held responsible for the countless deaths that have resulted from the use of their products? I'm detecting a trend here - that of an unwillingness to be responsible for one's actions: The wealthy should be able to profit to an unlimited extent from the country and government *WE ALL CREATE*, and yet shouldn't have to support it in any equal way. The wealthy should be able to cause untold damage to people and the planet in their quest to make money, but should bear no responsibility for any of it.

            Fourth: You're an utter fool if you don't realize the extent to which the government is in the hands of corporations. Most every war, conflict or otherwise destructive action the US government has engaged in for the past 70+ years has been at the behest of corporate interest. Be it the wars against Iraq, the funding of terrorists like Bin Ladden, the actions in South America... if the government is doing ANYTHING, you can rest assured there's corporate interest behind, and profiting from, it. And here again your hypocrisy is on full display - calling me greedy for expecting entities who benefit from a government to contribute to the support of it, while arguing in favor of those entities making trillions manipulating the government to their own ends paying, literally, not a single red cent.

            Fifth: Whether or not the political class stops the horrible things they do has no bearing on what the responsibilities of corporations should be in the support of the government that enables, facilitates and protects them.

            And finally, Sixth: Once again, your nievity is on full display with your last sentence. The prices we pay for products are carefully calculated to maximize profits - to hit that optimal point between price per unit and number of units sold. How would that change if corporations were completely absolved of their responsibility to pay taxes on money earned? It wouldn't. The corporation would simply make more money. And here again... I'm the greedy one.

            Love it. You're exactly the type of person my first comment was about, and you jump at the chance to reply, putting your vast ignorance on full display to prove my points.
            PC987
          • This was in reply to jcrjohnson

            This was in reply to jcrjohnson
            PC987
          • Your Reading Comprehension is Terrible

            I wrote out explicitly why all of your points were invalid, irrational, self-serving, and self-harming- what more did you want?

            First: Your personal definition of “fair” seems to be when someone else is forced to pay a couple orders of magnitude more than you, for all the stuff you want. Those “greedy” 1 percenters pay far more taxes in a year than you will in your entire life; and most of them also give several times as much to charity as you ever will. But, in your ideology of greed, other people paying a thousand times more than you are is STILL not enough to be “fair”. That is a pretty blatant example of naked greed.

            Second: The tax system is progressive, maybe not as much as you would like, but it is progressive. Even with shelters and avoidance, they pay marginally more as a percentage of their income and vastly more in absolute dollars. Absolute dollars matter to people who simply looking at the math and economics, while an obsession with percentage is the hallmark of those wracked with resentment and greed. They are paying a hundred times more than they are getting back in services from the state… so that you can get ten times more in services than you pay for. This still isn’t “fair” enough for you.

            Warren Buffet spun that story about paying a lower rate than his secretary to encourage self-serving legislation and regulation. He cited paying about 17% on capital gains while ignoring that it had already been taxed at 35% as it passed through Berkshire- so that money was taxed at 52%, not 17%. She was paying the top bracket 35% on her income… seeing as how she is up near the 1%. Buffett manipulated his story so he could get populist support for his lobbying to create a more complex tax system that would require even more people to buy tax avoiding services and financial instruments from Berkshire Hathaway held companies. With taxes going up and getting more complicated, Buffet and his company will profit in the billions.

            Third: I fully agree that the responsibility shirking aspects of corporations is a great injustice that should not be allowed to exist. It is a horrible affront that those ultimately responsible for the Deepwater Horizon deaths have not been held accountable for their actions. This creates an anti-free market moral hazard and has a very destructive influence on the behaviour of those who run businesses. As for tobacco, those who lied about cigarettes being healthy should have been held accountable… just like those who decided to smoke once they knew the health risks should be held accountable for their own actions.

            But we weren't talking about that, we were talking about the double taxation that is inherent in corporate taxes. As in the example above with Warren Buffett, it allows the state to pile taxes on taxes. It is those who call for ever more progressive taxation who are demanding to avoid personal responsibility. They insist a minority be held legally and morally responsible so that the majority may avoid that responsibility.

            Fourth: The government is selling legislation and regulation to crony capitalists left and right. This doesn't mean that “the government is in the hands of corporations”. Politicians made the rules so that there is no better ROI than going in bent kneed supplication to the politician. This is a morally corrupt system, and a direct attack on free market capitalism. You either do not understand my position, or you do not understand what the word “hypocrisy” means. I find it immoral and very distasteful that you do not excoriate the corrupt system- but instead call for ALL the capitalists to pay for the sins of the corrupt capitalists.

            Fifth: The wealthy are paying far more than the costs of state actions that, “enables, facilitates and protects them”; And that is taking into account that most of the costs of taxation is passed on to customers.

            Sixth: Your last point shows your complete lack of comprehension on what it takes to running a successful business. There is a certain level of profit that is manageable in every niche that can only be nudged around the edges, so long as there is competition within that niche. If there are a hundred options for purchasing a commodity good or service, the profit margin within that industry may be quite slim. Big box stores like Walmart usually work on profit margins in the 2% range. If the all-in cost of providing a $99.99 item goes from $98 to $97 due to a tax cut, they will drop the selling price to $98.99… or their competition will.

            Here is a really easy question to test if you understand what I just said. What does Walmart HAVE to do if increased taxation drives the cost of providing that item up to $99? I will give you a hint, despite what you may think, it can’t stay at $99.99.

            I fully expect your eyes to glaze over long before you get to the end of this tirade, but even if you managed to read to the end, I am pretty sure you have refused to learn anything.
            jcrjohnson
          • I'm no tax expert, but I'll happily reply to a few of your points. :)

            "First: Your personal definition of “fair” seems to be when someone else is forced to pay a couple orders of magnitude more than you, for all the stuff you want."

            --Yes, if wanting people who make 1,000 times as much as others to pay 1,000 as much as others is greedy then I am scrooge mc duck. Our planet has a finite amount of resources. If you want to keep 99% of them to yourself, then you will need to pay 99% of the taxes.

            "They are paying a hundred times more than they are getting back in services from the state"

            --Oh really? They don't get an army, air force, marines, navy and secret service to protect their assets for that money? They don't get roads leading to their businesses? They don't get public sewage power etc. to support their employees? Last I checked, they were eligible for the same benefits that I get and then some.

            The fact that you call people who want to spread the wealth greedy as if hoarding billions of dollars were the sign of a true humanitarian is hilarious. Troll on with that one.


            "It is those who call for ever more progressive taxation who are demanding to avoid personal responsibility."

            --I didn't see anyone say " I don't want to pay my fair share. Make someone else pay it"... except you.


            "They insist a minority be held legally and morally responsible so that the majority may avoid that responsibility."

            --No. The number of people involved doesn't matter. It's the amount of money that matters. If you make a million dollars, Pay $350,000 in taxes. Simple. Don't want to pay as much in taxes as a thousand people combined would? work less. You probably don't need as much money as a thousand people anyways. Face it. You are greedy.

            "Fifth: The wealthy are paying far more than the costs of state actions that, enables, facilitates and protects them"

            --No. They are in the same country as me. If invades our country it won't be to occupy my condo and steal my iPad. It will be to take all the gold and resources that the wealthy hold. Those foreigners don't want my beagle or my Honda. They want what warren buffets has and my kids are protecting it. Not his.

            "Sixth:"

            --LMAO where would this country be without Walmart? oh no! Walmart has successfully used that incredibly low profit margin to drive all competition out of business. It would be sweet irony if that were ultimately the cause of Walmart's death and I look forward to it with great enjoyment. Ask Walmart employees how the benefits are. Guess who pays those? That's right. The government. You know, the same government that you said doesn't support corporations... that one.

            "Here is a really easy question to test if you understand what I just said. What does Walmart HAVE to do if increased taxation drives the cost of providing that item up to $99? I will give you a hint, despite what you may think, it can’t stay at $99.99."

            They renegotiate with their manufacturer and a few thousand more Asian kids die in a factory so that the item can be made .99 cents cheaper and keep up the wallyworld profit margins.

            Now let's look at the other side of the coin. If Walmart doesn't pay that tax, who do you suppose does? Me. That's who. So now instead of having the option to pay Walmart .99 cents more for a crappy piece of furniture or whatever crap they are selling, I just lose .99 cents.

            Try again.

            "I fully expect your eyes to glaze over long before you get to the end of this tirade, but even if you managed to read to the end, I am pretty sure you have refused to learn anything."

            While you do a good job of trolling and your arguments are superficially witty, you ultimately come up short because no one in their right mind believes that anyone should be allowed to have billions of dollars protected by the men women and children of this country who can't afford to put their kids through college.

            Whether you like it or not, that army isn't made up of billionaires. It's made of every day people and It comes at the expense of many benefits that the people actually need. Your a complete moron if you believe that any of these billionaires could stay billionaires without the protection of the people who they refuse to support.

            If you don't understand that, you honestly should just get off the planet. It's been that way since day one.
            mrefuman
          • ouch

            You just got spoonfed there buddy, if you hadn't realized it. lol
            observer1959
          • Majority vs Minority

            If the mega-rich minority were paying taxes at the same rate as the down-trodden middle class majority, nobody would have an issue with them. The fact is, the greedy aholes don't pay anywhere near the tax rate that the middle class does. The government takes 1 dollar out of every 5 dollars the middle class makes. For the ultra-rich, this figure is more like 12 cents per every 5 dollars they make. This isn't the majority wanting to take from the minority. This is the majority wanting the minority to pay what they should be paying. The mega-rich have a saying - "own nothing, control everything." This is how they sidestep paying taxes. The vast majority of their assets are held offshore by personal shell corporations which are exempt from Federal taxes.

            Warren Buffet said he pays less tax than his secretary does. That's just wrong.
            BillDem
          • actually

            Warren Buffet pays his secretary's taxes by paying a wage that pays taxes.
            warboat
        • Re: allow such economic freedom

          This is precisely why any of this is happening.

          How many Chinese companies you know, that export their money offshore?

          It is the US that created these liberal rules, had some prosperity because of them and are now complaining why all of this is happening. You can't have your cake and eat it too.
          danbi
      • Then again..

        Why in the World would you want anybody to get their hands on your money. Since most people don't have a clue where their money goes or even how it should be used I don't think most people are even qualified to have an opinion. What I like in the US is that in some areas you even have a choice via the internet over where your local tax dollars go. But if you think you pay taxes and you get nothing from your national tax dollars, then probably plenty of corporations are avoiding their share and even forcing the government, via lobbies, to send your hard earned dollars elsewhere in the form of subsidies and services to put more money in their own pockets.
        jsargent
    • pay the tax

      The government does not run like an well oiled corporation. Time for successful corporations like Apple and Google tell the government what it thinks is right. The government just squanders because it is not "their" money.
      fairplay500
    • You need to learn the definition of the word "criminal."

      If what they're doing is LEGAL then they ARE NOT "criminals." Should we change the US Tax Code? Most definitely, but until we do there's nothing illegal with what Apple, Google, GE. Caterpillar, GM, and every other multi-national corporation is doing.
      matthew_maurice
      • Just because something is legal...

        ...doesn't mean it's not a crime. If it were, all we'd have to do to reduce the crime rate to zero would be to repeal all laws.
        John L. Ries
        • Actually, that's EXACTLY what it means.

          I think what you meant to say was that just because something's legal doesn't mean it's right.
          matthew_maurice
          • Ever heard of a crime against humanity?

            There are laws that are not written in the penal code.
            mrefuman