What Apple's Tim Cook Gets Wrong About Its Tax Avoidance


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Anyone watching Apple CEO Tim Cook on CBS’s “60 Minutes” last night would be forgiven for wondering why Congress and the IRS won’t just leave this nice man and his poor company alone. Cook fielded questions on a wide variety of topics from national security to the future of the “Apple car,” but generated the most headlines for his combative, evading and ultimately misleading comments on tax issues.

In response to a typically mild question from interviewer Charlie Rose — “How do you feel when you go before Congress and they say you’re a tax avoider” — Cook told Rose that “we pay more taxes in this country than anyone.” In fact, that’s true, by the tally of the bean counters at the Institute on Taxation and Economic Policy. Apple’s federal income tax bill — just over $8 billion in 2014 — is larger than any other Fortune 500 corporation reported in that year.  But as Rose gamely pointed out in response, this reflects the truly gigantic scale of Apple’s reported profits rather than an overdeveloped sense of patriotism. Focusing on the amounts of tax the company can’t avoid, rather than the taxes the company has successfully dodged, is a classic corporate PR strategy routinely practiced by even the most blatant tax avoiders. It’s also basically meaningless.

But Cook wasn’t done. Faced with Rose’s reminder that Congressional investigators had found that “Apple is engaged in a sophisticated scheme to pay little or no corporate taxes on $74 billion in revenues held overseas,” Cook shot back: “That is total political crap. There is no truth behind it. Apple pays every tax dollar we owe.”

Of course, the exhaustive 2013 investigation by the U.S. Senate’s Permanent Subcommittee on Investigations (PSI) that brought Apple’s tax avoidance practices to light never alleged that Apple’s practices were illegal. What the PSI found was that Apple had used loopholes in the tax laws to make legal, but ethically reprehensible, “cost-sharing agreements” with its insubstantial Irish subsidiaries that allowed the company to avoid paying tens of billions of dollars in income taxes. The question the PSI hoped to encourage Congress to consider as a result of these hearings was not whether Apple’s actions were illegal. It was whether the company’s brazen tax avoidance should be made illegal by closing these egregious tax loopholes.

Cook’s comment does bring up an important, uncomfortable point: fully two years after the PSI unveiled Apple’s Irish tax-avoidance strategies, Congress has done precisely nothing to act on the PSI’s findings. At the end of the day, it’s the responsibility of Congress to close the door on the blatant corporate tax avoidance practiced by Apple and other multinational corporations.

Until that day comes, Apple execs have signaled clearly that they will continue to stash their corporate cash in offshore tax havens. As ITEP found earlier this fall, Apple shifted a record $50 billion in cash offshore in 2014, and admitted paying a tax rate of just 2.2 percent on its offshore cash. The tens of billions of dollars in corporate taxes the company is not paying to the U.S. are making it harder to adequately fund roads, healthcare and schools. Cook was correct when he told a George Washington University commencement audience, in a speech excerpted in last night’s “60 Minutes” broadcast, that “[a] company that has values, and acts on them, can really change the world.” Too bad that company isn’t Apple.

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