Apple's Tim Cook Staunchly Defends Corporate Tax Payments - InformationWeek

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12/20/2015
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Apple's Tim Cook Staunchly Defends Corporate Tax Payments

In an interview with 60 Minutes, Apple CEO Tim Cooks defends how the company pays its corporate taxes and calls criticism of the tech firm "political crap." There's also a behind-the-scenes look with Jony Ive.

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In an upcoming interview on CBS' 60 Minutes news program, Apple CEO Tim Cook takes aim at critics leveling charges at the company over its payment of corporate taxes, calling the criticism "political crap."

When asked by interviewer Charlie Rose how he felt when being called by politicians that the company is a tax avoider, Cook responded by saying that Apple pays more taxes in America than anyone.

Rose responded by affirming that Washington knows this, and that the taxes the company pays are fair because of how much money Apple rakes in.

"I don't deny that -- we happily pay it," Cook responded. He also pointed out a lot of their money is overseas because two-thirds of their business comes from outside the United States.

When asked by Rose why he wouldn't bring that money back home, Cook said he would love to, but won't because it would cost him 40% of the total sum to do so.

(Image: EdStock/iStockphoto)

(Image: EdStock/iStockphoto)

"I don't think that's a reasonable thing to do," Cook explained. "This is a tax code, Charlie, that was made for the industrial age, not the digital age. It's backwards, it's awful for America. It should have been fixed many years ago. It's past time to get it done."

Rose then brought up the idea, proposed by some politicians, that Apple is in fact "engaged in sophisticated scheme to pay little or no corporate taxes on $74 billion in revenues held overseas," to which an increasingly animated Cook shot down immediately.

"That is total political crap," Cook said. "There's no truth behind it. Apple pays every tax dollar we owe."

The Apple story will be broadcast on 60 Minutes Sunday, Dec. 20, at 7:30 p.m. Eastern Time and 7 p.m. Pacific Time, and will also include a rare behind-the-scenes interview and tour with Jony Ive, Apple's design chief, who let the news crew's cameras into his studio for a look at the process that gave birth to products like the iPhone and iPad.

The interview with Cook also touches on consumer privacy issues, though the 60 Minutes website notes the interview was conducted before the terror attacks in Paris, where terrorists used encrypted messages as a means of communication.

Cook said he was against the idea of a so-called "back door," a surveillance term that would give government agencies -- and theoretically anyone smart enough to unlock it -- access to personal communications.

[Read how Tim Cook defends the iPhone's battery life.]

"There have been people that suggest that we should have a back door. But the reality is if you put a back door in, that back door's for everybody, for good guys and bad guys," Cook explained. "I don't believe that the trade off here is privacy versus national security. I think that's an overly simplistic view. We're America. We should have both."

Earlier this year, Cook gave an impassioned speech on defending consumer privacy and encryption, while being honored for corporate leadership by the Electronic Privacy Information Center (EPIC).

In addition to leveling charges at companies who use their users' data for profit -- he didn't name names, but Google, Facebook, and Twitter would all fit into that business model -- he blasted Washington politicians and claimed taking away encryption would have a "chilling effect" on Americans' First Amendment rights.

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Nathan Eddy is a freelance writer for InformationWeek. He has written for Popular Mechanics, Sales & Marketing Management Magazine, FierceMarkets, and CRN, among others. In 2012 he made his first documentary film, The Absent Column. He currently lives in Berlin. View Full Bio

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Ariella
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Ariella,
User Rank: Author
12/30/2015 | 6:15:02 PM
Re: I wouldn't pay 40%. Would you?
@Ashis As someone who has been through working in NYC while we lived in NJ and working in NJ while we lived in NY, I can tell you that we did not choose that for tax benefits. In fact, it's a pain in the neck because I have to file two different tax returns and calculate how much credit we get for the taxes paid into one state for the other. Whether you live and work in NY or just work in the state, it demands its cut, which can be more than NJ's. 

 

Italy's tax authories ruled against Apple, which will have to pay in the neighborhood of $350 million in taxes. See http://www.nytimes.com/2015/12/31/technology/apple-settles-tax-dispute-with-italian-authorities.html:

The investigation, which dates to 2013, examined whether Apple had moved roughly $1.1 billion in revenue from its Italian operations through an Irish subsidiary to lower the taxes that the company was obliged to pay in Italy.

The country's investigation into Apple's activities is the first time that an individual European country has focused on the company's complicated corporate tax structure, though policy makers in countries like France have previously looked at other tech companies' tax arrangements, including those of Google.

Ariella
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Ariella,
User Rank: Author
12/26/2015 | 6:18:47 PM
Re: I wouldn't pay 40%. Would you?
@Joe I know someone who has been a Long Island resident all his life but whose family would winter in Florida. On that basis he kept a Florida driver's license for years, decades even.  His wife claimed he did it to save on car insurance, but that really should go according to the car registration rather than the license. His car had NY plates. Anyway, he only switched to a NY license after having to get off of jury duty in Florida. 
Ariella
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Ariella,
User Rank: Author
12/26/2015 | 6:18:43 PM
Re: I wouldn't pay 40%. Would you?
@Joe I know someone who has been a Long Island resident all his life but whose family would winter in Florida. On that basis he kept a Florida driver's license for years, decades even.  His wife claimed he did it to save on car insurance, but that really should go according to the car registration rather than the license. His car had NY plates. Anyway, he only switched to a NY license after having to get off of jury duty in Florida. 
Ariella
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Ariella,
User Rank: Author
12/26/2015 | 6:15:32 PM
Re: I wouldn't pay 40%. Would you?
@Broadway You think all Apple employees are happy? Check this out:http://money.cnn.com/2015/06/11/technology/apple-store-lawsuit-tim-cook/

"In another email to Cook, sent on January 28, 2013, a Beijing Apple Store employee said, "Apple treats employees as animals." The unnamed employee noted that the Xidan Joy City Apple Store in China's capital city has an emergency exit that's blocked by Apple products."
Joe Stanganelli
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Joe Stanganelli,
User Rank: Author
12/25/2015 | 11:13:50 AM
Re: I wouldn't pay 40%. Would you?
Except Apple actually does meet the legal requirements (so I understand) of foreign residency for the pertinent parts of its organization via its corporate structure.

And if those "New Yorkers" spend 183 days each calendar year in Florida, they too qualify as Floridians; otherwise they're likely committing actual tax fraud -- which is different.

(Not legal advice.)
Ariella
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Ariella,
User Rank: Author
12/24/2015 | 7:16:49 PM
Re: I wouldn't pay 40%. Would you?
@Joe I disagree. I think to be in the same category, I'd have to resort to the kind of dubious practices some New Yorkers engage in, like claiming to be residents of Florida on the basis of merely visitng there in the winter in order to avoid paying state income taxes. see http://www.businessinsider.com/how-much-money-apple-avoids-paying-in-taxes-2014-6
Joe Stanganelli
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Joe Stanganelli,
User Rank: Author
12/24/2015 | 7:02:34 PM
Re: I wouldn't pay 40%. Would you?
I don't think tax avoidance is the same thing -- or even compares to -- this notion of "corporate greed."

Do you go to H&R Block and ask your tax advisor to get you a higher refund?  Congratulations.  You're guilty of the same kind of "corporate greed" as Apple is -- just on a smaller scale.

If you don't owe tax money, you don't owe tax money.  Period.  It's not a matter of morality; it's a matter of the terms of our tax system and our social contract.

(Other issues concerning Apple, such as offshoring practices, are -- of course -- much more debatable matters.)
Joe Stanganelli
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Joe Stanganelli,
User Rank: Author
12/24/2015 | 7:00:13 PM
Re: I wouldn't pay 40%. Would you?
@Technocrati: I think it *was* anticipated by Apple.  In the early '80s (1983, I think?), the company set up a super-sweet tax deal and corporate structure in Ireland, so their foreign earnings are "taxed" there at essentially nothing.  No reasonable CEO repatriate that money into the US at anywhere close to 40%.
Ariella
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Ariella,
User Rank: Author
12/20/2015 | 8:56:36 PM
Re: I wouldn't pay 40%. Would you?
@Technocratis certainly, it's not. What really fascinates me, though, is that Apple maintains its "halo" in the minds of many despite the fact that it actually represents the very epitome of corporate greed. In contrast, Walmart remains in the doghouse of public opinion, though it does a lot less evil in terms of evading taxes and amassing astronomical amounts of cash.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Author
12/20/2015 | 4:58:30 PM
I wouldn't pay 40%. Would you?
I remember the lynch mob that was the Senatorial hearings regarding this issue.  The only one speaking any sense was Rand Paul, who argued that the repatriation rate needs to be much lower (he proposed 5%); otherwise, the federal government will just go on seeing $0.00.

As he put it, "Money goes where it's welcome."
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