Excerpts of Apple Executives' Senate Committee Testimony on Tax Policy

[AZREOSpecialist]

So because someone creates jobs; they don't have to pay taxes?

Boy did you miss the boat! Apple paid $6 billion in Federal taxes last year. It's best to keep your pie hole shut if you don't have all of the facts.

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I'm sick and tired of Apple being unresponsive and inconsiderate when it comes to taxes.

When was the last time you paid more in taxes than the law required?

Please, please answer the question because you are full of it.

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I think Cook was pretty reasonable when he suggested a corporate tax rate in the 20's.

I'm in favor of an international minimum tax as Obama has suggested. If the nation of sale taxes below this mutually agreed upon rate, the home nation taxes the rest to that percentage (say 15%). No tax on repatriating money. That way you tax the profits only once. Makes sense to not tax the moving of money provided it was taxed fairly when it was first earned. And it's not a true transfer of wealth since it remains under the control of the same entity.

I don't think you heard him correctly. He said that in order for it to be attractive for most companies to repatriate their money back to the US, the tax rate would have to be "in the single digits" - that is what he said.

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Defended by the likes of Rand Paul? Sheesh!

I am not a fan of Rand Paul, but he was absolutely on point with his comments. 100%.

 

[IJ Reilly]

Yup. This has nothing to do with Apple, nothing to do with taxes, and nothing to do with the economy. This is all just about Senators pretending to do something so that they can continue clinging to power. Apple just makes a good prop because they're successful and more reporters will show up for the hearing.

All the preaching and hand-wringing going on around here borders on the comical. Practically everyone has picked their favorite Senatorial grandstander, based entirely on their customer loyalties and political persuasions (as if the truth is ever revealed that way). The corporations and members of congress thank you for your suspension of disbelief. Now hear this: nobody has any intention of fixing anything in our screwed up tax system unless the change is made entirely to serve their political interests. The national interest is not even on the agenda, though corporate interests certainly will be.

 

[gnasher729]

I paid less than 30.5% in Federal taxes last year. Apple paid 30.5%. Congress wants them to take money they earned entirely overseas and pay 35% on it. And that's on money that was already taxed in a foreign jurisdiction.

I'd say I'm better off.

You pay taxes on your income, not on your profit. Imagine you could incorporate your family as a company, which rents out your and your wife's working hours for cash, spends money to keep the workers (you and your wife) alive, spends more money to raise the next generation of workers and for training them (kids, school, university) and so on. Your "profits" would be quite low.

 

[AZREOSpecialist]

I watched part of it. They have brought in other corporations on their tax practices in the past. Last year it was HP and Microsoft. The way they conducted it was stupid. Levin spent a lot of time asking questions and then talking at the person attempting to answer, which was ridiculous. It's not like the IRS has the resources to audit a company the size of Apple anyway even if they did suspect illegal activity.

IRS has agents permanently stationed at Apple every single day of the year. Apple is under a constant audit by the IRS and they review every single filing when it is made. This was stated in the hearing. So everything Apple is doing passes IRS muster the moment it happens.

 

[jozeppy26]

It sounds like you appreciate people who agree with you more than you appreciate honesty. Most politicians won't tell you what they really think because they're afraid they might offend people and hurt their chances of reelection. We really need to eliminate the labels Democrat and Republican, Conservative and Liberal. Listen to what the candidates ideas are and vote for someone who makes sense. Having political parties is like competing sports teams....Asinine. I don't belong to any team. I vote for who makes sense to me regardless of their political affiliation.

Actually what's asinine is pretending that political party doesn't matter (or even worse, advocating for a no party political process). You do realize for most issues members practically vote in blocks. So lets say you're an independent who tends to lean liberal and there's a republican you like? He supports 80% of your issues. Well just wait until the caucus... His voting record is likely to shift to fall in line with the party platform (at least on most major issues). So now that candidate you voted for because he shared so many of your ideals, now only votes in support of 20% of them. Party affiliation matters a great deal. Another D or R is another vote of majority against a possible filibuster.

Plus, you think the political stalemate is bad now? Lol just wait until you have to convince each member individually with no leadership on either side to corral voters. My god nothing would pass. Ever.

P.S. Even independent members you vote for choose a party caucus to attend. The (I) after his or her name is strictly for political purposes (or because he or she had a falling out with state party leadership).

 

[olegandbuster25]

hahaha hell yeah im glad the final decision was made by people with brains

Rand Paul and McCain cracked me up. Love those guys.

 

[everything-i]

Levin didn't seem to understand it.

From where I was sitting Levin seemed to understand it only too well which is why he talked over everyone and ended with a 10 minute rant giving no chance for rebuttal. He knew his argument was hollow.

 

[E.Lizardo]

God I love Rand Paul.
Interesting that since HUGE Democratic contributor Jobs is dead Democrats suddenly go after Apple(who have committed NO crime).Maybe they aren't getting the protection money they were used to.
Of note,GE paid NO tax last year(also legally)and nothing is said to them.Of course they are working closely with the administration.Hmmm.

 

[sbrhwkp3]

Rand Paul crushed it out of the park. The tax code is the problem.

They do what every single one of us does; pay as little in taxes as possible. Why is that so hard for people to understand?

 

[sbailey4]

As others have stated, this is really not about taxes. It has everything to do with getting their faces in front of a camera for political reasons.

Yes true. Our current administration has hosed up everything so bad that they do these sorts of things to make it look like they are beating up the "rich" to help us middle and lower classers so they look better. Plus it takes the heat off all the crap they have done wrong. Some folks will be all gung hoe for them beating up rich Apple.

 

[paul4339]

Levin's just mad because California has Apple, etc which are huge tax contributors; and Michigan has... well ... GM, etc.

.

 

[AZREOSpecialist]

You pay taxes on your income, not on your profit. Imagine you could incorporate your family as a company, which rents out your and your wife's working hours for cash, spends money to keep the workers (you and your wife) alive, spends more money to raise the next generation of workers and for training them (kids, school, university) and so on. Your "profits" would be quite low.

You are sadly misinformed. Individuals pay taxes on income, businesses pay tax on profit. Get that? When a business spends money, it is a tax deduction from income. Income minus deductible expenses = taxable profit. Very little of a businesses' expenses are not tax deductible to some degree, so your above statement is factually incorrect.

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Yes true. Our current administration has hosed up everything so bad that they do these sorts of things to make it look like they are beating up the "rich" to help us middle and lower classers so they look better. Plus it takes the heat off all the crap they have done wrong. Some folks will be all gung hoe for them beating up rich Apple.

You give the government far too much credit.

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You pay taxes on your income, not on your profit. Imagine you could incorporate your family as a company, which rents out your and your wife's working hours for cash, spends money to keep the workers (you and your wife) alive, spends more money to raise the next generation of workers and for training them (kids, school, university) and so on. Your "profits" would be quite low.

Quit your day jobs, form a S-corp, then pay yourself and your spouse via quarterly dividends ensuring that very little money (let's say zero) stays in the S-corp by year's end. Corp pays no taxes because there is no profit, you and your wife pay a reduced tax because your income is through capital gains and not wages. You also don't have to pay self employment tax or pay any of the payroll taxes you have to pay as a wage earner.

Are you starting to see how this works? Of course if you and your wife are W-2 wage earners, it would not make sense to do the above. But if you are in a position to generate business income through a product or service, well then what are you waiting for? LOL

 

[iGrip]

I would have really liked to see Steve Jobs in front of those guys.

He certainly would not have worn a tacky, ill-fitting suit like that CFO guy.

 

[portishead]

Not a big Rand Paul fan, but he's right. This is dumb.

 

[dernhelm]

Levin's just mad because California has Apple, etc which are huge tax contributors; and Michigan has... well ... GM, etc.

.

Huh? Have you checked their profits lately? GM and Ford are doing pretty well now and magnificently well over their entire history. Apple's track record wasn't so good 10 years ago, lest you forget.

Picking on Apple is stupid because every corporation who is beholding to shareholders does the same thing. But if leads to tax laws that aren't stupid, and that don't have massive loopholes, then something good might come of it.

 

[numlock]

If you had actually watched the proceedings, AOI was setup in 1980 to move Apple computers into the European an Asia markets because they had the people available with the required skill sets in law, sales, service and distribution. While not specifically stated, trade between the America's is much easier than Eurasia so there is a good chance Apple did not need that benefit in the 1980.

Levin was being a [male part] and not letting them explain again because he did not know how the law worked with at arm's length. The IRS had to school him.

i only caught the second part. i have to watch the first part on cspan

it wasnt that he wasnt allowing them to answer it was the fact they didnt agree to his wording (he wasnt trying to trick them into admitting guilt or anything) so they wouldnt answer the real question.

obviously you cant answer that question as well with having actually watched both parts

 

[paul4339]

Huh? Have you checked their profits lately? GM and Ford are doing pretty well now and magnificently well over their entire history. Apple's track record wasn't so good 10 years ago, lest you forget.

Picking on Apple is stupid because every corporation who is beholding to shareholders does the same thing. But if leads to tax laws that aren't stupid, and that don't have massive loopholes, then something good might come of it.

I'm not referring to profit track record (they can be making a boat load for all I care) ... but with taxes, GM wiped off 45B in taxes during re-listing and paid zero taxes in 2011 (their highest recorded profit year, ever).

.

 

[Rot'nApple]

Why are these lawmakers angry with Apple for following the laws they created?

Because the lawmakers who didn't read the laws but voted on it anyway, thought nobody else would actually read the laws in order to take advantage of the loopholes.
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[osaga]

"To whom much is given, much is required." And in Apple's case the world requires the impossible. The burden that rests on Tim Cook's shoulders day in, day out, must be tremendous. I don't envy his position, it seems to be mostly thankless. He deserves way more praise.

 

[thekev]

Quit your day jobs, form a S-corp, then pay yourself and your spouse via quarterly dividends ensuring that very little money (let's say zero) stays in the S-corp by year's end. Corp pays no taxes because there is no profit, you and your wife pay a reduced tax because your income is through capital gains and not wages. You also don't have to pay self employment tax or pay any of the payroll taxes you have to pay as a wage earner.

Are you starting to see how this works? Of course if you and your wife are W-2 wage earners, it would not make sense to do the above. But if you are in a position to generate business income through a product or service, well then what are you waiting for? LOL

That isn't accurate. Normal dividends are taxed as income. Read the link. Executives often get a lot of their income through stock, but they have to hold it long enough or it's also taxed as income. You should read up on income gains vs capital gains.

 

[maxp1]

You know you've jumped the shark when RAND PAUL! is defending you.

 

[paul4339]

That isn't accurate. Normal dividends are taxed as income. Read the link. Executives often get a lot of their income through stock, but they have to hold it long enough or it's also taxed as income. You should read up on income gains vs capital gains.

Correct, it's taxed as ordinary income...
I think the advantage with S-corp has something to do with getting around payroll taxes (the profit is subject to taxes as ordinary income but not subject to payroll taxes)... so the IRS will look out for people that intentionally give themselves a really low wage but high profit distribution.

.

 

[blesscheese]

I watched part of it. They have brought in other corporations on their tax practices in the past. Last year it was HP and Microsoft. The way they conducted it was stupid. Levin spent a lot of time asking questions and then talking at the person attempting to answer, which was ridiculous. It's not like the IRS has the resources to audit a company the size of Apple anyway even if they did suspect illegal activity.

I didn't watch any of it, but hearings like this are typically a sham. The legislative committee that is supposed to write the laws is so beholden to the special interest groups and lobbyists, they really can do nothing but grandstand.

In the case of flat taxes, the reason you will *never* see one implemented is that then the Congress will have no special influence to peddle in exchange for campaign donations and cushy lobbying jobs with the corporations and other special interest groups when they leave.

 

[Mike Valmike]

"To whom much is given, much is required." And in Apple's case the world requires the impossible. The burden that rests on Tim Cook's shoulders day in, day out, must be tremendous. I don't envy his position, it seems to be mostly thankless. He deserves way more praise.

I suspect he can console himself by swan-diving into his vault full of gold bullion, a la Scrooge McDuck. Trust me, Tim Cook is paid handsomely to bear his burden.

 

[NoNothing]

i only caught the second part. i have to watch the first part on cspan

it wasnt that he wasnt allowing them to answer it was the fact they didnt agree to his wording (he wasnt trying to trick them into admitting guilt or anything) so they wouldnt answer the real question.

obviously you cant answer that question as well with having actually watched both parts

The reason Levin did let them answer was because Levin was clueless on the law and had to be schooled by the IRS in the 3rd act with the treasury and IRS. Levin was trying to convince the treasury and IRS the issue was regulatory but had to be explained it was legislative. Levin was made to look like a fool. Apple's answer of, "it was setup that way in 1980" was a meter of law.

In short, I have no idea why Levin was allowed chair that discussion given his ineptitude on the subject mater.