Watch Tim Cook’s Senate testimony

Here is Tim Cook and Peter Oppenheimer.

  • tylernol

    if you make your profits overseas, then you get taxed overseas. Why is Apple getting crucified for playing by the rules?

    • Apple’s an easy target for elected people who want to maintain the appearance of doing public service.

      I’m willing to bet money that none of them will suggest amending the tax code in any way.

      • rattyuk

        Let’s see. Apple gets hits therefore it gets hit.

        This is just the same as the all those hit whoring web sites with their anti-Apple rubbish. Grandstanding and ego in Washington runs rife.

      • tylernol

        yup, if Congress wants to fix this, they need to close the loopholes. But they wont.

      • the Ugly Truth

        amend it and close their own “loop” that they created? yup…pigs will fly!

    • It’s about off-shore profit shifting [moving sales off-shore to not pay US taxes].

      • tylernol

        but the sales are off-shore. Apple sells quite a bit off-shore, I believe it actually sells more overseas than in the US.

        • ~61% is overseas so they shift it all to an overseas “Apple” in Ireland then pay no taxes there or here.

          It’s winning for sure.

          • kibbles

            apple does not shift all of their income overseas. they pay 6 billion in US income tax.

          • According to these testimonies, they do. Their Ireland base has no operations or employees (until a couple years ago, I believe they said). It is 100% a tax shelter where they don’t pay taxes here or in Ireland.

            It is a touchy subject for sure but Apple isn’t clean of avoiding paying US taxes, regardless of how much they did pay (which is a boat load).

          • Apple employs 4,000 people in Cork office to move its billions around the world.

          • Timmy

            Apple has real operations in Ireland, both sales and managing. In fact, the Apple Online Store operates from Ireland to all countries within Europe. If you buy your hardware online, it comes from Ireland. They even have manufacturing in Ireland. I’ve seen iMacs in the Netherlands that are Assembled in Ireland. Also, Apple pays taxes on all its products in each Apple subsidiary situated in each country in Europe. Apple has, for example, a subsidiary in the Netherlands; and pays taxes in the Netherlands on all sales there — and also pays its corporate tax there. This cash is then moved to a holding in Ireland where it is used for its operations across Europe; this to streamline its cash balans — or else Apple would have cash in every country. Yes, the tax paid for moving the money into Ireland is low, as per the agreement made in the 1980’s, but that’s between Apple and the Irish government.

          • Just quoting what they stated. According to the testimonies there was nothing in Ireland until recent years.

            I have no knowledge of the accuracies, just discussing the testimonies.

          • Timmy

            Oh, no, they have always been operating real in Ireland for a long time. The online store has been operating from at least the beginning 2000s — I think it opened in in 1998 for Europe. The distribution of Apple products in Europe has always been from Cork Ireland — packaging, assembling, etc. They used to have a huge factory there; which scaled down in late 1990s, and now is being scaled up.

          • Cool beans. That’s why I said earlier (in another comment) “I look forward to the detailed look at these statements.”

            There seemed to be some interesting things being said. Ultimately, Cook/others handled themselves very well and looked really strong in their statements.

          • Timmy

            The thing is, Apple has been operating with subsidiaries since the 1980s; that’s the way the company has been set up. With the US company handling sales and taxes for the America’s, and the Irish subsidiary holding the cash for the rest of the world — and the 2008 agreement continued that practice. So nothing has changed in 30 years. Now, chairman Levin makes it seem like the 2008 agreement shifted things; the only thing that shifted is that more sales from Apple comes from the rest of the world compared to the 1980s. In the end, Apple’s practice is the practice of companies around the world that use subsidiaries or daughter companies to hold cash outside the country; which can also be used for operations around the world. Count the Holdings that exist.

          • Yeah, the reference to the 80’s was quite interesting. That was very forward thinking of them. I wonder if other countries will try to attack now seeing as Apple is moving money to Ireland and out of their markets.

            Definitely interesting stuff.

          • This’s not quite a true. The Ireland subsidiaries handle their consolidated post-tax non-US income, where the taxes have already been paid in the non-US countries where the income was earned. So there are no US taxes required on that unless the funds are repatriated to the US.

          • Sorry, they did clarify the Ireland tax rate was 0.05% so some taxes were paid.

  • Interesting. Apple is shifting things to Ireland and paying no tax since it is “produced” out of there, so says Mr. Harvey. I look forward to the detailed look at these statements.

    According to Mr. Harvey, Apple is being disingenuous about what it is doing but not illegal as they are taking advantage of tax loops.

    • davidpc

      you’re just as clueless as the congressmen. Apple is not shifting money. Profits made in Germany are taxed in Germany. Profits made in Italy are taxed in Italy. After they are taxed, they put the money in a single bank account (the holding company) instead of 50 bank accounts. If that bank account earns interest, they pay US taxes on that interest because that is new untaxed profit.

      • lol. Relax dude. I made no statements of my thoughts on the matter. Read my comment again then feel free to apologize. 😉

      • Domino67

        “Profits made in Italy are taxed in Italy”

        As they just a few months ago paid a 385 million tax fine to Italy, it is obvious you were wrong 3 years ago.

  • George

    Adobe Flash Player! Please, what are you thinking? You new to the Mac iPad experience or something…;-)

    • Flash still rules live streaming tech. It’s unfortunate for devices but HTML5 video needs a bit more growth to take over.

    • rattyuk

      I don’t think Jim’s responsible for the CSPAN feed.

    • qka

      Pro vs. Con.

      Progress vs. Congress.

      This is a Congressionally provided stream.

      ‘Nuff said.

  • Sic Transit Gloria Mundi

    Mr Shay’s testimony: Apple adheres to the tax code. The tax code doesn’t work. End

  • terpacks

    Why isn’t GE being questioned?

  • Sic Transit Gloria Mundi

    Mr Harvey’s testimony: Apple adheres to the tax code. The tax code doesn’t work. Let’s try to fix it.

    I see a pattern forming here

  • Mr. Johnson makes a really great point about US corporate tax rates not being competitive so the logical thing is for corporations to seek lower cost tax locations.

  • mikey

    Listening to John McCain blame Apple for the shitty efforts of Congress to act makes me want to puke. And convinces me that this is just political theater, with zero intention to make law.

    • mikey

      And Rand Paul to the rescue. (Note: I am not a fan of Paul, but he is actually making sense in this case)

      • It is indeed one of the few sensible things I’ve ever heard Paul say, but I have a feeling I’d strongly disagree with him on exactly how the tax code should be revised.

  • Rand Paul just got a free iPads for life. He just went to bat like a boss for Apple! lol

    Edit: …and I agree with his outlook on missing the boat and the US looking in the mirror.

  • How the hell does this issue come under “Homeland Security”?

    • jacksonsquire

      It’s also a subcommittee for government affairs. The tax code is a government affair. The subcommittee predates Homeland Security.

      • What a convoluted structure.

        • jacksonsquire


  • Tim Cook: “We’ve created more jobs than the senior ranking member of this subcommittee has, and we know he deeply resents us for not paying lobbyists to offer him regular bribes.”

  • “Yes, Senator McCain. We take advantage of everything you and your colleagues have made available to large American businesses. So sorry you’re not personally getting a taste of that.”

  • Senators Levin and McCain claim not to have this hearing to crucify Apple, but the questions they ask have an inherent assumption that Apple’s processes are deceptive and attack those practices, without any effort to try to understand these practices (Senator McCain’s questions during the second panel highlight this) nor ask for help in how to avoid or make better the situations in which these practices necessary. They simply claim that what Apple done is deceptive, with no other perceived purpose of the hearing. Crucification, plain and simple.

  • Jeff926

    This video doesn’t play on iPad.

  • Fucking Congress. These guys are MORONS.

  • Good God, why are we having this witchhunt? Why not investigate all the INSIDER trading that Congress does and doesn’t want to change?

    Douche bags. VOTE THEM OUT PEOPLE.

  • BC2009

    Levin is trying to spin a narrative that the overseas holding companies owe more money to the US company for use of the technology created in Cupertino. He is saying that agreement that gives partial ownership of that Intellectual Property to the Irish holding company AOI is flawed. This is a reasonable stance.

    However, what is not reasonable is that he just called the Apple CEO and CFO to testify about this and interrupted them every time they tried to answer one of his questions. He might as well have brought out a soap box and started preaching his narrative to the cameras. He made accusations and purposely prevented the Apple execs from presenting evidence to the contrary, lest his narrative collapse.

    Levin is running a media circus — not a senate committee. He is a disgrace to the Senate and to his political party.

  • Don Morris

    For those of you whose browsers don’t open to Mr. Cook’s testimony, you can find it starting at ~2:21:30.

  • the Ugly Truth

    “money will go to where it is welcome”.

  • This “problem” is so clear and simple, so I can’t understand what is so “complex” or “difficult” for these Congressman to understand. Apple sells shit overseas. They pay taxes overseas. The after-tax profits are then put into investments by these holding companies in Ireland. If they bring it back to the US, they get hit at 35%. If they leave it in Ireland, they just earn interest. If Congress fixes the tax code and lowers it down to 8 or 9%, all that money comes back.

    It’s really quite simple. What is so hard to understand “why” this is happening? Clearly these Congressmen are blowing smoke up the collective skirt of the people of this country. They all take advantage of loopholes they helped create, and they have no intention on closing them.

  • Scooter

    Incredibly shortsighted. Congress, Levin, seems to drive congress, tax law, to force companies to shift their R&D overseas. This would yield absurdly negative economic benefit in terms of jobs and taxes, not just corporate tax, since multiplied by the loss of jobs and income tax. These congressmen are not patriots, and have no clue how to support jobs in the USA.

  • Hardik Panjwani

    The issue is not as simple as most people make it out to be.

    Yes, the US tax code is monstrously complex to navigate, but the particular “loophole” Apple appears to have taken advantage of actually arises from the intersection of US tax law and Ireland’s tax law. Apple Operations International (AIO) is incorporated in Ireland but has no actual employees in Ireland, AIO’s employees (basically top Apple brass) are physically located in the USA . Because the United States bases residency on where companies are incorporated, while Ireland focuses on where they are managed and controlled, AIO was able to fall neatly between the cracks of the two countries’ jurisdictions and has not paid taxes in the US or in Ireland as AIO is a ‘stateless’ entity as far as tax laws go.

    Of course the Congress carries some blame in this. But when one is talking about a complex global system of trade and tax codes, it is a little understandable that not every scenario has been foreseen by Congress. It is also understandable that companies will take every advantage available to them as the modern business is very high stakes, cut throat competition.

    Now, it’s worth reiterating that the accusation here is not that Apple is paying LESS tax by locating in Ireland. It is that Apple intentionally incorporated certain entities in Ireland (despite the lack of any connection to that country, except on paper) so that it could “fall through the cracks” of the tax codes in the US and in Ireland and pay NO TAX ANYWHERE. While legal, this is not particularly ethical.

    This brings us to the next question: why the outrage?

    A part of it is certainly envy. Another part of it is also the desire for grandstanding by the politicians. Now the real nub of the matter is that a US citizen has to pay taxes on his/her global income. But American multinational corporations don’t need to pay income tax on their global income and can avoid billions of dollars in taxes by moving income to tax-friendly jurisdictions like Ireland. Now it would arguably be fine if they paid taxes there but the insidiousness of this loophole is that they don’t even pay taxes in Ireland. So its a win-win scenario for the multinationals.

    A related point is that as far as lobbying and funding political parties goes the multinationals have the same rights as an US citizen.

    Another point is that, adjusted for inflation, on the average the wages of the middle class have increased by only $59 in the last 30 years, while the top level employees and the super rich have seen their income and wealth increase almost 300% (One of Krugman’s articles in NYT has a link to this study, cant find it right now)

    Thus we have a scenario where a person would think that while individuals have both rights and duties to the State, the multinationals have only rights and little or no duties to the State. It is this imbalance that is the real source of the outrage.

    Another question is why particularly Apple?

    It is true that all the multinationals use similar mechanisms so singling out Apple is unfair. But in a certain sense it is similar to a cop chasing many speeding cars and being able to catch only one of them. At present, Apple has a highly visible profile and making an example out of Apple ensures news coverage and is also good PR for the politicians.

    At one point Microsoft was under scrutiny for being too large and in fact a judge ordered that Microsoft be broken in two companies. Again unfair and the ruling was overturned but it bought attention to the issue.

    So whats the solution?

    1) The Congress must reform the tax code to make it simpler and in particular it must to such loopholes so that none of the multinationals can take advantage of them.

    2) Allowing repatriation of overseas money in 2004 did not work out well economically so while insisting on 35% is not feasible neither should the number be brought down to single digits. Something between 15-20% seems like a sensible compromise.

    3) In fact this looks like a good idea too. Create public pressure by making taxes a part of SEC filing.