Former U.S Senator John E. Sununu wrote a newspaper column describing the Apple tax situation. According to the Senator, Apple was not responsible for the international tax strategy used to avoid the American taxes. In fact, he blamed the United States Congress for not dealing with the tax issue as it should.
The former politician accused the members of the U.S. Senate Permanent Subcommittee on Investigations for charging Apple on taxes when the company is following the laws as written. Sununu suggests the fact that the Congress is responsible for originally writing the laws and that it has failed to update them to solve all these problems.
In this case, companies such as Apple are taking their funds overseas. Other major American companies such as Google and Yahoo followed Apple’s international tax strategy, and they sheltered their subsidiaries in Ireland, in order to avoid paying U.S taxes. Others have gone even further than Apple with holdings in Caribbean islands, or bank accounts in the Cayman Islands.
A few days ago, Apple’ CEO Tim Cook was called before the subcommittee in order to explain why Apple owns more than $10 billion in cash overseas. Most of that money is kept through subsidiaries in Ireland. This fact allowed Apple to avoid other billions of dollars in repatriation taxes when those funds returned to the U.S.
In order better understand the situation, here is a recent status of the repatriation tax. The current tax rate for bringing overseas cash back to the United States is 35 percent, which is one of the highest rates of this kind in the world. When Cook was summoned to answer the subcommittee, the chief executive argued that the U.S. tax code needs a dramatic revision in order to fix this problem and to avoid other ones.
As Sununu wrote within his article, Cook dealt with the situation far better that he was expected to do. “When you employ 60,000 workers in the United States” it is easier to be blunt”, argued Sununu. It is worth mentioning the way Cook opened its defense speech: “We pay all the taxes we owe – every single dollar”.
The confidence Cook showed within the plea represented a great advantage for the Cupertino-based company. “A defensive posture makes people think you have something to hide,” said Sununu. Compared to Cook, the IRS managers used the Fifth Amendment before the Congress the next day.
While some blamed Apple for cheating on the U.S Government by avoiding paying its taxes, others felt that they should defend the tech giant. U.S Senator Rand Paul who served the Senate committee that questioned Apple’ CEO criticized its colleagues for “bullying” a successful American Company when it has broken no laws.