Tim Cook is heading to Washington to talk taxes and overseas cash with the message: We pay every dollar that we owe. The CEO is set to testify in front of the Senate Permanent Subcommittee on Investigation on Tuesday and the Apple chief spoke with Politico ahead of the hearing. He defended Apple’s conduct saying that the Cupertino California company is operating well within the rules with regard to taxes, referring to a massive overseas cash hoard. He said the following regarding the matter:
I can tell you unequivocally. Apple does not funnel its domestic profits overseas. We don't do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe. And so I'd like to be really clear on that.
For those of you who are unaware of the situation, Apple’s cash issue came under the limelight over the past few months as investors who were dissatisfied with slowing revenue growth and a declining stock called for the company to turn some of its overseas holdings into a bigger dividend. Apple eventually circumvented the tax issue by taking on $17 billion in debt. The move, which was the firm’s first bond offering since 1996, allowed Apple to fund billions in cash returns to investors while avoiding the $9.2 billion it would have paid had it brought its overseas cash home.
It should be noted that Apple isn’t the only large corporation that keeps its money off American shores. A recent analysis found that Apple was holding roughly $40 billion in untaxed earnings in countries with a more favorable tax structure, such as Ireland. Google and Amazon are other tech giants that have done the same for tax reasons.
Many senators are quite ready to tear into Apple but it’s likely that Cook will parry such criticisms by pointing to Apple’s impact on the American economy. The company employs 50,000 workers in all 50 states and its actions have created another 550,000 jobs in manufacturing and software development. Cook will likely note the company’s $100 million investment in domestic manufacturing with a U.S.-built Mac expected to roll off production lines this year as well.
We’ll ultimately see how things turn out though when Cook testifies in front of the Senate Permanent Subcommittee on Investigation.