Those who are ‘hitting’ at multinational companies’ tax strategy of sheltering profits made abroad from the U.S., may have to be a little louder, as Apple CEO, Tim Cook has come in defense of the iphone maker.
In an interview with The Washington Post, Cook said that his company would not repatriate money from abroad unless there was a “fair rate.”
The Apple boss made the comment in reaction to critics of the iPhone maker’s strategy on shelter income.
The tech giant along with some multinational companies in the U.S. has been subject of criticism over a tax strategy that allows them to shelter profits made abroad from the U.S. corporate tax rate, which at 35 percent is among the highest in the developed world.
The move complies with the letter of the law, if not the spirit, as a few particularly strident critics have lambasted Apple as a tax dodger. The nonprofit Citizens for Tax Justice estimates that big companies have parked more than $2 trillion offshore, which is subject to more favourable tax rates.
While some proponents of the higher U.S. tax rate say it’s unpatriotic for companies to practice inversions or shelter income, Cook hit back at the suggestion.
“It is the current tax law. It’s not a matter of being patriotic or not patriotic,” Cook told The Post in a lengthy sit-down. “It doesn’t go that the more you pay, the more patriotic you are.”
Cook acknowledged that Apple was effectively taking advantage of a massive tax loophole, which he said was perfectly legal.” “The tax law right now says we can keep that [profit] in Ireland or we can bring it back.”
Cook added that it was up to Congress and the president to enact tax reform, which he is “optimistic” will take place sometime next year.
The CEO’s comments are all but certain to stoke a new debate over taxation during an already contested election cycle. Republican White House contender Donald Trump recently unveiled an overhauled tax plan that, among other things, lowers the corporate rate to 15 percent from the current 35.
However, Democratic nominee Hillary Rodham Clinton —who enjoys the backing of Cook, Warren Buffett and other billionaires—has staked a case on higher taxes for the wealthy, but envisages a series of fixes that would try to discourage companies from moving abroad, or avoiding U.S. taxes.
It’s not as if the tech giant is exactly hurting for money. Apple is sitting on at least $200 billion in cash on hand, a massive accumulation that some investors have called on the company to re-invest.
Cook added that “when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we’re in, which is about 5 percent, so think of it as 40 percent. 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 U.S. corporate tax rate has been a subject of vigorous debate. Critics say the code rife with distortions that critics say discourages companies from repatriating capital, and lead to strategies like “inversions” that encourage firms to merge with foreign companies, and move operations abroad to avoid higher taxation.