FOX News: Apple CEO Tim Cook to face Senate panel over taxes

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Apple CEO Tim Cook to face Senate panel over taxes May 21st 2013, 12:09 Published May 21, 2013 Associated Press Sept. 12, 2012: Apple CEO Tim Cook speaks during an introduction of the new iPhone 5 in San Francisco. Cook is scheduled to testify on Capitol Hill Tuesday May 21, 2013, to explain the companys tax strategy, which a Senate subcommittee says lets it avoid paying billions of dollars in taxes.AP Photo/Eric Risberg WASHINGTON –  Apple employs a group of affiliate companies located outside the United States to avoid paying billions of dollars in U.S. income taxes, a Senate investigation has found. The world's most valuable company is holding overseas some $102 billion of its $145 billion in cash, and an Irish subsidiary that earned $22 billion in 2011 paid only $10 million in taxes, according to the report issued Monday by the Senate Permanent Subcommittee on Investigations. Why go overseas? The U.S. is one of the few countries where foreign profits are taxed twice, first by the overseas government, then again at the 35 percent U.S. corporate tax rate when profits are repatriated. The corporate rate is one of the highest in the world, says the OECD, nearly as high as Argentina, Chad and Uzbekistan. Read more The strategies Apple uses are legal, and many other multinational corporations use similar tax techniques to avoid paying U.S. income taxes on profits they reap overseas. But Apple uses a unique twist, the report found. The company's tactics raise questions about loopholes in the U.S. tax code, lawmakers say. The spotlight on Apple's tax strategy comes at a time of fevered debate in Washington over whether and how to raise revenues to help reduce the federal deficit. Many Democrats complain that the government is missing out on collecting billions because companies are stashing profits abroad and avoiding taxes. Republicans want to cut the corporate tax rate of 35 percent and ease the tax burden on money that U.S. companies make abroad. They say the move would encourage companies to invest at home. Apple CEO Tim Cook, the company's chief financial officer and its tax chief are scheduled to testify and explain the company's tax strategy at a hearing by the subcommittee Tuesday. They are expected to face tough questions. The subcommittee's chairman, Sen. Carl Levin, D-Mich., and other panel members could hold up Apple as an example of a powerful company using its privileged position to avoid taxes while ordinary Americans must pay them. The subcommittee last fall derided executives from other technology giants over similar allegations. Apple refuted the subcommittee's assertions in testimony prepared for the hearing and released to the public Monday evening. Apple said it employs tens of thousands of Americans and pays "an extraordinary amount" in U.S. taxes, citing the roughly $6 billion it paid in fiscal 2012. Apple "complies fully with both the laws and the spirit of the laws," the testimony says. "And Apple pays all its required taxes, both in this country and abroad." "Apple does not use tax gimmicks," the statement says. For more on Apple's tax troubles, see FoxBusiness.com. Related Stories Navy dolphin finds 130-year-old torpedo 19-foot long python captured in Florida Is BlackBerry still alive? New gadget can recharge a cell phone in 30 seconds Yahoo approves deal to buy Tumblr for $1.1 billion

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