Apple CEO talks taxes ahead of hearing: 'We pay every dollar that we owe'Tim Cook is going to Washington to talk taxes and overseas cash holdings, and the Apple CEO is heading to the hill with a message: We pay every dollar that we owe.
Cook will testify in front of the Senate Permanent Subcommittee on Investigation on Tuesday, and the Apple chief spoke with Politico ahead of the hearing. Cook defended Apple's conduct, saying that the iPhone maker is operating well within the rules with regard to taxes, referring to a a massive overseas cash hoard.
"I can tell you unequivocally," Cook said, "Apple does not funnel its domestic profits overseas. We don't do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe. And so I'd like to be really clear on that."
As of March 30, Apple held $102.3 billion in cash overseas, up 24 percent from the end of September 2012. The company cannot bring those funds back ashore without paying corporate taxes on them.
Apple's cash conundrum came to a head over the past few months, as investors dissatisfied with slowing revenue growth and a declining stock called for the company to turn some of its overseas holdings into a bigger dividend. Apple eventually circumvented the tax issue by taking on $17 billion in debt. That move, the firm's first bond offering since 1996, allowed apple to fund billions in cash returns to investors while avoiding the $9.2 billion it would have paid had it brought its overseas cash home.
Apple isn't alone among large corporations in keeping its money off American shores. A recent analysis found that Apple was holding about $40 billion in untaxed earnings in countries with a more favorable tax structure, such as Ireland. Google and Amazon are among the other tech giants that have done just the same for tax purposes.
Some of the senators before which Cook will find himself are quite ready to tear into Apple, even if the hearing is unlikely to result in any actionable legislative initiatives. Senator Carl Levin (D-Mich) called the entire tech industry to task for its tax avoidance, while Oklahoma's Sen. Tom Coburn (R) has previously said he was "livid" at Apple's tax actions.
Cook may parry such criticisms by pointing to Apple's impact on the American economy. The company employs 50,000 workers in all 50 states, and its actions have created another 550,000 jobs in manufacturing and software development. Cook will also likely note the company's $100 million investment in domestic manufacturing, with a U.S.-built Mac expected to roll off production lines this year.
In addition to the United States, Apple has come under fire in both Britain and Spain for practices that allow it to slip past tax regulations. A British report last year said that Apple pays about half the taxes it should by basing its operations out of Ireland.
A similar report from Spain's El País showed Apple routing 99 percent of its spanish sales through its Irish subsidiary. The iPad maker paid about 2.6 million euros in taxes for the year. Spanish Apple Store sales were up 86 percent.