“When quizzed about its tax practices, Apple CEO Tim Cook told a Senate subcommittee his company complies with the law, and if that didn’t sit well then Congress should come up with new laws,” Jeff Gamet writes for The Mac Observer. “It looks like lawmakers may finally be taking his advice, and even President Barak Obama is looking for ways to get at the money Apple and other major corporations are holding outside of the country.”
Gamet writes, “When grilled by the subcommittee, Mr. Cook said, ‘The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free movement of capital. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. We strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.'”
“First, we have Senators Barbara Boxer (D-CA) and Rand Paul (R-KY) announcing they’re co-sponsoring a bill that would cut the taxes companies pay on earnings they bring into the country in a one-time deal from 35 percent down to 6.5 percent,” Gamet writes. “Next we have President Obama calling for a one-time 14 percent tax on offshore holdings, regardless of whether or not those funds are brought into the country. As part of the deal, companies would be able to bring that now-taxed money into the country without paying additional taxes. Future overseas earnings would face a 19 percent tax, again, whether or not the money is brought into the United States.”
Read more in the full article here.
Related articles:
Obama targets foreign profits with tax proposal, Republicans skeptical – February 2, 2015
Senator Rand Paul finds Democratic partner for tax repatriation holiday – January 30, 2015
Businesses hopeful Republican control of U.S. Congress will break tax-reform gridlock – November 5, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
There are the “tax rates”, and also the reality of tax compliance.
While the corporate tax rate is “35%”, the reality is that the mean corporate tax rate paid is only 6.5%. How will this change, and how many $$ will be available for needed infrastructure work, if a nominal 6.5% or 14% “official” tax rate be enacted?
According to Apple’s quarterly report, they paid around 26% tax rate.
The 26% is the overall amount of taxes they paid, taking into account corporate taxes, property taxes, employer taxes, etc. etc. However, the 35% isn’t the actual rate paid since there are deductions for local taxes paid and various other things. It’s why we desperately need a simplified tax code for everyone.
Just bringing the money to the US will be a good thing in and of itself. The money will earn revenue for the US just sitting in US banks as opposed to earning revenue for foreign banks around the world. The US has some of the worst tax code on the planet. Extremely short-sighted and almost corrupt in nature.
“Almost Corrupt”????? Den of THIEVES!! ALL of em!
I agree. The only problem is that a policy like that very well could have the opposite of the intended effect; instead of making companies pay taxes for offshore funds, it could just encourage them to move their corporate headquarters to countries with lower taxes. Look at Burger King, they moved their corporate headquarters to Canada due to the lower tax rate.
“they moved their corporate headquarters to Canada due to the lower tax rate”
The irony is thick.
So, Tim said:
“We recommend a dramatic simplification of the corporate tax code.”
What is being proposed is the opposite of what Tim said.
Therefore, his advice is not being taken.
I half-agree. That’s what I thought at first, but I think it would be simpler in the way that it taxes all of a company’s income instead of just the portion of it that’s in the US. But yeah, for the most part, it’s not simpler.
Hey! OBlahBlah While your “EYEING” Apples piggy bank over seas, why don’t you uphold the U.S. CONSTITUTION and defend America’s IP & look into the corruption of the DOJ & SEC. Start with the overseas affiliations of those judges in the Apple vs. Samsung & ebook pricing cases. Koh… Cote… both corrupt to the core. The Emperor Has No Clothes & You Mr. OBlahBlah are the Puppet Master. Go ask Lady Elaine. Pff pathetic.
Wuz this sirius or satyre?
A little of both. And don’t call me Shirley. 😜
Every time one of these big bills are suggested, they always aim to solve next year’s problem with vague references to “increasing the economy” or “keep America globally competitive and would promote U.S. economic growth”. All the while they almost always increase the tax burden on whomever it’s directed. If it doesn’t, then it provides 1001 loopholes for some and obfuscates the tax code for others.
Businesses are in the business of making profits and taxes directly counter that goal. Sooner or later it will be more attractive to no longer be a US corporation and move abroad. Other than convenience, some kind of loyalty, and entropy, there is nothing holding big corporations like Apple in the US.
If US lawmakers make it too expensive a climate to base a business in the US, they will go elsewhere and take the jobs with them. Cranking the taxes to 11 is just horrible boneheaded short term thinking that only appeals to people with little forethought or memory. It’s solving today’s problem at tomorrow’s expense. Makes me sick.
Yep. “short term thinking”.
Plus this “economic model” to resolve issues….
“even President [Barak Obama] is looking for ways to get at the money”.
That’s what they are actually doing with the changes they are seeking, trying to get at the money because they have it. How easy and convenient is that?
Forget it is Mr Obama or Apple, it’s the very narrow thinking and does not address the fundamental economic problems.
I see your point, but you are ignoring one important factor: a large company can’t just uproot its entire workforce and expect it to move to another country. Nor could it expect to find the same kind of talent and culture in, say, Jakarta or Shanghai or wherever.
Again, I agree that corporate taxation is a joke, but I don’t think a company is that free to just move away.
Regardless of the tax rate the wealthy companies and individuals will send in their army of lobbyists with a mountain of money for “campaign contributions” that will cut actual taxes paid dramatically. How else do you think Romney could make $22 million in one year and have a tax rate of only 13%
Ok, so the government of the USA wants to tax at a rate of 19% for overseas earnings whether the money comes back or not: WTF is that crap?
Those liberals sure like stealing every dollar that they can get their hands upon.
Here is what I don’t understand. Apple makes an iPhone in China. Apple then sells the iPhone in China and makes a profit of x yuan from the sale. The iPhone never touched US soil. In fact, it never left China.
So why does the US government believe that they deserve a cut of this profit?
Where was that iPhone designed? Doesn’t that aerobie office use resources in Cupertino? Doesn’t Cook fly in and out of US Airports? Doesn’t Apple rely on the US Patent System? Defend itself or sue others in US courts? Does Apple rely on police departments to recover stolen iPhone prototypes in bars? Perhaps even Apple procures raw materials from the USA that are transported on public roads and shipped through secure ports.
Maybe Apple exists on the internet, which is a DARPA project that exists only because of US federal funding.
Maybe the people who service, code, or manage Apple’s products were educated in the USA, where universities and their students are almost always funded in part by federal grants or underwritten loans.
Maybe your big bad government does more good in the world than you realize.
Yes, our big, awesome government delivers super duper great value for the billions we throw at it every year!
Few people would argue that Apple or anyone else doesn’t deserve to pay their fair share in taxes. But at some point, the government needs to at least try to live within its means instead of constantly looking for new ways to dig into everyone’s pockets.
Yo Congress! This is a great opportunity for win-win…bring the dollars back home…not just for today…for the billions to come from what will be the first Trillion dollar company! Tim speaks the truth!
The amazing part of increase taxes…many Americans truly believe that Washington can solve all of our problems, if we just let them tax us into a utopia community!
Oh no! Apple and Obama both think this is a good idea? The many “Obama’s always wrong” and “Apple’s always right” simpletons who frequent this site are going to hurt their brains trying to rationalize this.