Senate Questions Apple’s Tax Tactics

On Tuesday, Apple CEO Tim Cook appeared before the U.S. Senate’s Permanent Subcommittee on Investigations to defend his company’s tax strategy. Lawmakers criticized Apple’s practice of using subsidiaries based in other countries in order to avoid some U.S. taxes.

The Wall Street Journal’s Danny Yadron, Kate Linebaugh and Jessica E. Lessin reported, “Apple Inc. turned to ‘alchemy’ and ‘ghost companies’ to pay no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, U.S. Senate investigators said at a hearing Tuesday. Apple Chief Executive Tim Cook was set to testify before the panel Tuesday morning and propose changes to a tax code that provides American companies strong incentives to keep overseas earnings bottled up at foreign subsidiaries, according to prepared testimony.”

James Politi with The Financial Times added, “In his opening statement on Tuesday morning, Carl Levin, the Democratic chairman of the Senate permanent subcommittee on investigations, said Apple adopted ‘offshore tax avoidance strategies whose purpose is tax avoidance, pure and simple.’ Mr Levin noted that just in 2012, Apple had exploited tax loopholes allowing it to avoid $9bn in US taxes, or $25m per day and said such practices did ‘real harm’ to the US economy, disadvantaging domestic companies that don’t make use of ‘tax gimmicks.'”

The Washington Post quoted Senator John McCain (R, Ariz.), who said, “Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale it is also among America’s largest tax avoiders.”

In other Apple news, CNET’s Lance Whitney noted, “Apple stores continue to outpace the rest of the retail industry in sales per customer. The company took in record revenue per visitor of $57.60 during the first quarter, mobile analyst Horace Dediu said Monday in his Asymco blog. That’s up from $51.75 per visitor in the first quarter of 2012.”