The Senate’s investigation into Apple’s offshore revenues and subsidiaries has sparked controversy early in the week, but it wasn’t necessarily the accusation of tax evasion, but the straightforward statements panel members made.
Senator John McCain in particular was quite abrupt, calling Apple as one of America’s largest tax avoiders.The Senate Permanent Subcommittee on Investigations released this Monday a report that accused Apple of having employed dubious methods to shit profit offshore and avoid paying due tax to the US government. The company’s offshore financial practices were avidly debated and investigated, after Apple’s main subsidiary failed to pay tax or declare income for the duration of three years. Things got even more interesting when the report took an in-depth look at Apple’s tax rate in Ireland, which turned out to be a special deal that gives the company preferential treatment.
Panel members did not waste time with polite statements. In fact, Senator John McCain was not only aggressive in highlighting Apple as the worst of the worst, but also had quite some challenging questions to ask. “Apple claims to be the largest US corporate taxpayer, but by sheer size and scale, it is also among America’s largest tax avoiders” McCain argued whereas subcommittee member Carl Levin added that the “complex web of offshore entities” Apple has used in its tax evasion gimmick is the “Holy Grail of tax avoidance”.
The news that Apple cut a special deal with Ireland on their corporate tax did not sit well with Senator McCain. “My question is, couldn’t one draw the conclusion that you and Apple have an unfair advantage over domestic based corporations and companies”, McCain asked Tim Cook during the hearing, “in other words, smaller companies in this country that don’t have the same ability that you do to locate in Ireland or other countries overseas?”
To all of these, Tim Cook kept his calm and grin, and did not waste the opportunity to pitch his own intellectual property law reform as well as to consistently argue that Apple is a job creator, a proud American company that is “equally proud of our contribution to the American economy”.
It is obvious that Apple is using some tax loopholes. And for good reason. The US corporate tax is 35 percent, the highest in the world. Compare that to the incredibly advantageous tax rate of less than 2 percent that Apple had agreed for with Ireland.