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Monday, May 27, 2013, 08:35 am PT (11:35 am ET)

Former US Senator pens defense of Apple's international tax strategy

Former U.S. Sen. John E. Sununu authored a newspaper column on Monday blaming the United States Congress, and not Apple, for policies that allow corporations to avoid American taxes.

Sununu, a one-term Republican Senator from New Hampshire, is now a columnist for the Boston Globe. In a piece published on Memorial Day, the former politician blasted members of the U.S. Senate Permanent Subcommittee on Investigations for singling out Apple on taxes when the company is following the laws as written.

Sununu

John Sununu served as Representative and Senator for New Hampshire from 1997 to 2009.


Apple Chief Executive Tim Cook was called before the subcommittee to explain why Apple has $100 billion in cash overseas. Most of that money is kept through subsidiaries in Ireland, which allows Apple to avoid billions of dollars in repatriation taxes if those funds were to be brought back to the U.S.

The current tax rate for bringing overseas cash back to U.S. shores is 35 percent, one of the highest tax rates of its kind in the world. Cook argued before the subcommittee that a dramatic revision of the U.S. tax code is necessary to address that issue.

"Making the case for his company's decisions, Cook came off far better than the average witness on Capitol Hill," Sununu wrote in his column. "Perhaps it's easier to be blunt when you employ 60,000 workers in the United States, but lines like 'we pay all the taxes we owe — every single dollar' set the tone from the start.

"In public and private sector alike, a defensive posture makes people think you have something to hide. Cook's confidence contrasted dramatically with IRS managers pleading the Fifth before Congress the very next day."

In Sununu's eyes, the blame for companies like Apple sheltering their funds overseas lies on Congress, which originally wrote the tax laws and has failed to update them to resolve these concerns. Other major American companies, including Google and Yahoo, also avoid paying U.S. taxes with subsidiaries in Ireland — and some go even farther than Apple with holdings on Caribbean islands or bank accounts in the Cayman Islands.

Sununu joins U.S. Sen. Rand Paul (R-Ken.), who serves on the Senate committee that questioned Apple Chief Executive Tim Cook on his company's tax practices. During the hearing, Paul criticized his colleagues for "bullying, badgering and berating" a great American success story when Apple has broken no laws.

"We should have brought in here today a giant mirror, so that we can look at the reflection of Congress, because this problem is created by the awful tax code," Paul said.