Apple Inc. CEO – Tim Cook – hit back at critics of Apple’s strategy to avoid paying the U.S taxes. In an interview with The Washington Post, Cook said the Cupertino-based firm would not bring back that money from abroad unless there was a “fair rate.”
What we are doing is legal: Cook
Apple Inc. , along with other multinational firms, has been censured over its tax strategy that lets them keep profits – made abroad – away from the U.S. corporate tax rate. The U.S. Corporate tax rate at 35% is one of the highest taxes in the developed world. Many condemned the tech giant as a tax dodger. Big firms have parked more than $2tn abroad at more favorable tax rates, estimates the non-profit Citizens for Tax Justice. Some proponents of the higher U.S. tax rate say it is unpatriotic for firms to shelter income or practice inversions.
Cook struck back at the suggestion. In a lengthy sit-down, Cook told The Washington Post, “It is the current tax law. It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.”
In the interview, Cook admitted that Apple was effectively taking benefit of a massive tax loophole, adding it is “perfectly legal.” In addition, Cook noted that right now, the tax law says they can keep that profit in Ireland or bring it back.
Cook said it was up to the Congress and the President to enact tax reform, and he is “optimistic” that it will take place sometime next year. Recently, the Republican Party’s Presidential Nominee – Donald Trump – disclosed an overhauled tax plan that lowers the corporate rate from the current 35% to 15%.
In contrast, Democratic White House contender – Hillary Rodham Clinton, who has the backing of Warren Buffett, Tim Cook, and other billionaires; has staked a case of higher taxes for the wealthy. But she expects a series of fixes that would try to discourage multinational companies from avoiding the U.S. taxes or moving abroad.
Apple CEO asking for a fair rate
Apple Inc. has at least $200bn in cash on hand. Cook said when they bring it back, they will pay 35% federal tax, and then a weighted average across the states that they are in, which is about 5%. So overall, it is around 40%. “We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it,” the CEO said.
For quite some time now, the U.S. corporate tax rate has been a subject of debate. Cook said they are not a tax dodger. He further indicated that the tech giant earns most of its money offshore. The CEO said there was a tug of war going on between the countries over how a company allocates profits. People were not arguing if Apple should pay more taxes, rather who they should be paid to.