Apple CEO Tim Cook is going to speak in front of Congress next week with a proposal to simplify corporate tax laws. Cook’s appearance is taking place at a time that lawmakers are going to revamp the tax code as a whole. Cook is going to present specific proposals that are aimed at encouraging companies to bring back foreign earnings to the United States as part of an effort to invest in job creation and research and development, according to The Washington Post. Cook will be speaking at a Senate hearing on Tuesday that is going to take aim at companies shifting profit overseas as part of a method to lower tax bills.
The statistics about earnings overseas are staggering. According to JPMorgan, over 1,000 companies hold an estimated of $1.7 trillion in earnings overseas. Since Apple is one of the largest companies in the world and they have a large cash pile, Tim Cook was put in the spotlight. Apple has around $145 billion in cash, but is rumored to have only about $45 billion available in the United States. Last month Apple launched a coporate debt offering to help fund payouts to shareholders. Analysts believe that Apple did this as a way to borrow against their cash to pay dividends to investors and avoid U.S. taxes.
?If you look at it today, to repatriate cash to the U.S., you need to pay 35 percent of that cash. And that is a very high number,? said Cook in an interview with The Washington Post. ?We are not proposing that it be zero. I know many of our peers believe that. But I don?t view that. But I think it has to be reasonable.? Analysts believe that lowering tax rates will not be the best solutions because companies have employed creative ways of lowering their tax bills including the double Irish arrangement. Apple
The Senate permanent subcommittee on investigations will talk to Cook about how Apple has moved profits overseas to lower tax bills. The same subcommittee have spoken to Microsoft and Hewlett-Packard about the same behavior in the past. It is likely that Cook will speak to Senator Carl M. Levin (D-Mich.).
Cook added that Apple has a goal to create more jobs in the United States even though a majority of their production happens in China. Later this year, Apple is going to launch a $100 million project to have a line of Mac computers built in Arizona (component manufacturing) and Texas (final assembly). President Obama acknowledge the initiative in his State of the Union speech earlier this year.
Tim Cook said that Apple is on track to paying around $7 billion in federal taxes this year. ?When you combine state and federal, Apple is paying approximately $1 million an hour in just domestic income taxes,? added Cook. ?You may not know this, but Apple likely is the largest corporate taxpayer in the U.S.?