trying to maximize profit i think is truly counterproductive. it nds like what your saying is shortly of what is productive in washington. look, it is a ceo’s job to try and use legal and ethical means to maximize their profits and to maximize their shareholder return in a way that is sustainable over the long haul. is this ethical? it’s legal, but i guess there’s this question of whether and in who’s interest? apple is frequently here in its testimony putting forward this issue of acting in the interest of shareholders. it seems that is effectively the only thing it needs to worry about and perhaps with some merit. you know, i’m not in the habit of just boldly defending everything companies do, but in this case, i really think the politicians on capitol hill need to take some responsibility for the fact that over decades they have created a tax code that is clearly, uncompetitive, clearly counterproductive in its complexity and again, feigning shock and outrage is easy. what’s difficult is getting down to the hard work of reforming this tax code in a way that makes it more productive in terms of raising tax revenues, more competitive in terms of bringing cash back and insenting our american companies. all of this is hard work. a hearing is easy and it’s good theeder, but not solving the this will be a very bizarre conversation for a let of people watching now. apple stands charged on avoiding taxes on $74 billion. how far below 35% do you have to reduce the corporate tax rate for it to vote to tax that $74 billion? surely, it simply doesn’t. it it just keeps it offshore. that’s the deal. it’s got nothing to do with effective rates of taxation. well, i think it has everything to do with it. carly is absolutely right. she says berating the companies, leading companies like microsoft, hewlett-packard, apple, j.p. morgan, same committee. senator levin’s committee is not getting us anywhere. it’s avoiding the real issue which is an outmoded u.s. tax system. i don’t know global corporations that don’t have a global tax policy and try to optimize their taxing. companies have to pay taxes where the profits are earned so apple is peaing taxes all over the world, in germany, china or in japan where they’re earning money and that’s why they’re paying 30% in taxes and they’re paying a sizeable $6 billion to the u.s., but i think the real issue is we need a different tax policy for repatriation. bill, we should be clear that actually that’s not strengthly true. i know of many big american companies that create the image that they’re running their european operations out of ireland, and those people are actually based in the united states though they are within the hl departments in ireland to make it look as if that’s where business is being done. this is a much bigger issue than simply intellectual company within technology. it comes to theeth iks of doing business. it’s a much bigger issue, isn’t it? i think you have a dysfunctional tax code, and i think the answer is to change the repatriation policy. i would advocate one of two thing sfs either we have a 12-month repatriation holiday in which companies submit a plan to the u.s. treasury to ve invest that fund. say apple wanted to reinvest 5 billion or ten billion in the new factories in the u.s. or any company could submit a threat to the treasury. right now to be able to put those factories and they’re in acquisitions outside the u.s. because they have the cash there and it’s basically tax-effective to do that, and i just think it’s wrong. the other thing is we can permanently reduce it to 78%. it’s the highest in the world so when you do this you’re going to cause legal behaviors that are not the benefit of the u.s. we are not cree ating jobs and we have many other advantages, american companies or i know companies i was on the board of a swiss company. they have a global tax policy, too. i just don’t know anyone that doesn’t do that. this is not about the cayman islands. this is about having a system in the united states and that incentivizes companies to bring their cash back to the u.s. and invest in the u.s., not just invest in bonds and mortgage instruments, but invest in the u.s. in packries and rnd and perhaps an acquisition. that’s what i would advocate. first of all, i agree with everything that bill just said, but simon, i want to go back to the point you made which is in essence of accusing companies of 19inging irish operations. you may be aware of companies that have done that. i am not aware of any companies that have done that. it is important to remember why so many companies went to ire lann in the ’90s. the reason they went to ireland in the ’90s is the irish company made a strategic choice. they lowered their tax rates and invested heavily in their education system and a lot of companies including and not limited to hewlett-packard placed factories there. our senators and congressmen need to get with the program and the reality that we are competing in a global economy. we — every american company must compete in that global economy and in order to compete successfully we have to have a tax system that is competitive globally. our rates are not competitive. the complexity of our tax code is clearly counterproductive to everyone. it’s courter productive in terms of raising tax revenues. it’s counterproductive to dumps in terms of the amount of manpower they have to invest in understanding the tax code. it is literally killing small businesses because of its complexity. as i say, it makes good theater to haul up a ceo of a company like apple and berate them, but it doesn’t get down to the issue of solving the problem which is massive tax reform, including lowering the rates and simplifying the system and recognizing that this is a global economy. and this is the most important point. it is a global economy and frankly, you’ve got it at the same time the european parliament looking to vote right now on trying to harmonize taxes around the world. it will take years for that to happen and in the in the meantime we know how companies are going to behave. can i just say one thing
Apple’s CEO Heads to Capitol HIll
Tim Cook plans to propose tax changes that encourages firms to bring home more of their offshore funds, reports CNBC’s Eamon Javers.
Transcript:
this isthe pursuit of perfection. a monday, good morning. good morning, becky. apple created a new invention. essentially no shore corporate entities, corporate entities tax residents of any country in the world. carl levin called that the holy grail of tax avoidance. look at what the subcommittee is arguing after an investigation into apple structure. they said apple entities not declared tax residents of any jurisdiction in the world. they were legally registered in ire land but they weren’t tax residents there or here in the united states. one is apple operations international. it had net income of $30 billion from 2009 to 2012 but paid no corporate income taxes anywhere in the world from that period, 2009 to 2012. here’s what apple says in response to these allegations. they say a lot $6 billion apple is likely the largest corporate income tax payer in the united states and apple does not use tax gimmicks. even the existence of this does not reduce u.s. tax liability for the company. senator john mccain came out yesterday with a number of senators and staffers and blasted apple. talk a listen. apple executives like to boast that their company is the highest corporate tax payer in the u.s. what they often leave out is the second part of the story, that apple is one of the largest corporate tax avoiders. it’s unacceptable. and they’re not the only ones. but they are the most auto egregious offender. tim cook will come to the hill to testify about this today. he will make arguments about changing u.s. tax law and said everything apple did was legal within the obscure tbgs system that the united states has right now. so it will be a tough day for apple. there haven’t been any allegations of illegal activity with any of the senators? no. the committee staff yesterday said all this stuff they did was gal. they were creating these entities which had no employees, no offices in ireland legally. but under irish tax law they weren’t irish but they were considered to be americans. so they weren’t legal tax entities of any country in the world. that’s something the subcommittee staff said they have never seen before. explain this, though. on one song you have the government saying they have created this stateless, almost homeless subsidiary if you
