Apple has has officially released the statement CEO Tim Cook will give before Congress on May 21st, defending the company's tax practices and asking for an overhaul of the system. The Senate hearing is meant to illuminate the issue of companies shifting funds offshore to avoid taxes, though Cook has denied his company has done anything wrong. "Apple is likely the largest corporate income tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury in FY2012," the statement says. "These payments account for $1 in every $40 in corporate income tax the US Treasury collected last year." It puts its tax rate at roughly 30 percent.
The company describes itself as a major driver of economic growth, both through its direct sales and the "app economy" that has grown up around its phones and tablets. Among other things, it mentions its North Carolina data center and the upcoming shift of some Mac production to the US, something Cook referred to in an interview ahead of the hearing. "Apple complies fully with both the laws and spirit of the laws," the testimony says. "And Apple pays all its required taxes, both in this country and abroad."
"Apple pays all its required taxes, both in this country and abroad."
Apple also defends its recent decision to take on billions in debt to buy back shares rather than use some of its over $100 billion overseas cash reserve. "Apple respectfully suggests that any objective analysis will conclude that the Company's choice to issue debt, rather than repatriate foreign earnings, was in its shareholders' best interests," it says. "If Apple had used its overseas cash to fund this return of capital, the funds would have been diminished by the very high corporate US tax rate of 35 percent (less applicable foreign credits). By contrast, given today's historically low interest rates, issuing debt at a cost of less than 2 percent is much more advantageous for the Company's shareholders."
While it's touted the benefits of its current tax payments, Apple is also clear about the fact that it's lobbying for change. Arguing that the current system, which "applies industrial era concepts to a digital economy," makes the US less competitive, the company has laid out its own plan for reform, asking Congress to lower corporate tax rates, eliminate corporate tax expenditures that are often characterized as "loopholes," and tax foreign earnings at a "reasonable" rate that would allow them to be moved more freely to the US. According to Apple, these reforms are a "necessary step to promote growth and enable American multinational companies to remain competitive with their foreign counterparts in both domestic and international markets."
None of this is particularly surprising for a major US company, nor is Apple necessarily being singled out for criticism. Both Microsoft and HP were called to testify in a similar session last year, as part of an ongoing investigation by the Senate's Permanent Subcommittee on Investigations. The latest hearing, which is set for the morning of the 21st, will also include witnesses from the IRS, the Department of the Treasury, and Harvard Law School.