expenditures. lower income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the united states. we make this recommendation with our eyes wide open fully recognizing that this would likely result in an increase in apple’s u.s. taxes. but we strongly believe that such comprehensive reform would be fair to all taxpayers, would keep america globally competitive and would promote u.s. economic growth.
Cook: ‘Proud to Represent Apple’
Sen. Carl Levin, (D-MI), swears in Apple’s CEO before a Senate committee hearing on tax reform. Cook defends his company’s stand on tax repatriation, adding Apple complies with the letter and spirit of the tax law and does not use “tax gimmicks.”
Transcript:
all witnesses who testify before the sub committee are require to be sworn. at this time please stand and raise your right hand. you swear that the testimony you’re about to give will be the truth, the whole truth, nothing but the truth, so help you god. i do, so help me god. we’ll kuz our traditional timing system today. you’ll see the lighting change from green to yellow. giving you an opportunity we can ask that you limb your oral testimony to ten minutes. my thanks to you and your colleagues for being here. you may proceed. i’m sorry. we changed that. it’s to a 15-minute opportunity, instead of 10 minutes. i appreciate that. good morning. i am proud to represent apple before you today. apple has enjoined unprecedented success in the past ten years. international revenues are twice as large as domestic revenues. as a result i’m often asked if apple still considers itself an american company. my answer has always been yes. we are proud to be an american company and equally proud of our contributions to the u.s. economy. apple is a bit larger than the company created by steve jobs in his parent’s garage 40 years ago. that entrepreneurial spirit drives everything that we do. you can tell the story of apple’s success in one word. innovation. it’s what we’re known for. products like iphone and ipad, which created entirely new markets. these give customers something so incredibly useful. they can’t imagine their lives without them. you may be surprised to learn much of the innovation takes place in a single u.s. zip code. 95014. that’s in california where we have built an amazing team. they come to work each day with just one mission, to make the very best products on earth. their job is to dream up things that capture the world ice imagination. one of those inventions is the app store. if you’ve ever used an iphone or ipad, you know mobile apps are one of the hottest things in technology today. apps that made software development one of the fastest growing job segs in the u.s. today. we estimate that the app store has generated 300,000 new jobs in the u.s. app developers have earned over $9 billion from apps sold on the app store. half in the last year alone. none of that economic activity was there five years ago. apple took a bold step in developing the a prk p store and the app economy was born. today it’s a multibillion dollar marketplace that shows no sign of slowing. we chose to keep the design of the products right here in the united states. while job growth stagnated this the last decade, apple’s u.s. workforce withdrew by five told. today we have 50,000 employees and employees in all 50 states. apple that has created hundreds of thousands of jobs with small businesses that support us. the components for iphone and ipad, for example, are made in texas. and iphones glass comes from kentucky. in total, apple is responsible for creating or supporting 600,000 new jobs. we used if earnings growth to invest billions to create more american jobs. we’re investing $100 million to build a line o in the u.s. later this year. this product will include components from illinois and florida and rely on equipment produced in kentucky and michigan. we constructed one of the world’s largest data centers in north carolina, reflecting our commitment to the environment the data center is powered by the largest fuel cell of its kind in the u.s. we are building data centers in oregon and nevada, a new headquarters in cupertino. apple has become the largest corporate incomes taxpayer in america. last year our u.s. federal ch effective tax rate was 30.5%, and we paid nearly $6 billion in cash to the u.s. treasury. that’s more than $16 million each day, and we expect to pay even more this year. i would like to explain to the sub committee very clearly how we view our responsibility with respect to tacks. apple has real operations in real places with apple employees selling real products to real customers. we pay all the taxes we owe every single dollar. we not only comply with the laws, but we comply with the spirit of the laws. we don’t depend on tax gimmicks. we don’t move an electrical property offshore and use it to sell our products back to the united states to avoid taxes. we don’t stash money on some caribbean island. we don’t move our money from foreign subsidiaries in order to reskirt the tax. our foreign subsidiaries hold 70% of the cash because of the very rapid growth of our international business. we use the earnings to fund our foreign operations, such as spending billions to acquire commitments for apple products and apple retail products around the world. under the current u.s. corporate tax system, it would be very expensive to bring that cash back to the united states. umpl the tax code has not kept up with the digital age. it handicaps american corporations in relationship to the foreign competitors who don’t have constraints on the free movement of apple. we believe it brings increased responsibilities to the communities where we live, work and sell our products. we enthusiastically embrace the belief to whom much is given, much issing quired. in addition to creating hundreds of thousands of american jobs and developing products that deeply enrich the lives of millions apple is a champion of human rights, education and the environment, our belief that innovation should serve the deepest values and highests a places is not going to kpang. we are deeply committed to our country’s welfare. we believe great public policy can be a catalyst for a better society d a stronger america. apple has always believed in the simple. not the complex. you can see this in the products and in the way we conduct ourselves. in the spirit that we recommend a dramatic simplification of the tax code. it should eliminate all corporate tax expenditures. lower income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the united states. we make this recommendation with our eyes wide open fully recognizing that this would likely result in an increase in apple’s u.s. taxes. but we strongly believe that such comprehensive reform would be fair to all taxpayers, would keep america globally competitive and would promote u.s. economic growth. my colleague will now make a few opening remarks and then we’ll be happy to answer your questions. thank you very much.
Apple’s CEO Arrives on Capitol Hill
Tim Cook smiled as he arrived to give testimony before a Senate committee, reports CNBC’s Eamon Javers. And Sen. Rand Paul (R-KY) and Sen. Carl Levin (D-MI) disagree on whether Congress should apologize for “bullying” one of America’s “greatest success stories.”
