Apple CEO Tim Cook is expected to defend the tax practices of the computer giant on Capitol Hill Tuesday. A Senate panel recently reported that the extremely popular manufacturer of the iPhone, iPad and a slew of other products with a lowercase "I" in their name has been hiding their income overseas in order to avoid paying taxes.
The report written by Sen. John McCain, R-Ariz., and Sen. Carl Levin, D-Mich., claims that Apple "has used a complex web of offshore entities - - including three foreign subsidiaries the company claims are not tax resident in any nation - to avoid paying billions of dollars in U.S. income taxes."
The focal point of Apple's questionable practices are a few subsidiaries the company has established within Ireland, a country where they were able to negotiate a 2 percent tax rate as opposed to the 35 percent tax rate in the U.S., according to CNN.
Apple Operations International has no employees in Ireland and holds its meetings within the U.S. despite legally claiming to be in Ireland. Over a period of four years the subsidiary has earned $30 billion and through exploiting loopholes in the Irish tax code as well as the American tax code the subsidiary has paid zero taxes to either nation, according to ABC News.
Cook released his testimony to the public last night prior to the hearings, in which he asserts that Apple "does not use tax gimmicks." Apple believes that the problem is not what they have done but instead in the outdated tax code of the U.S., according to USA Today.
"Apple welcomes an objective examination of the U.S. corporate tax system, which has not kept pace with the advent of the digital age and the rapidly changing global economy," Cook said.
Cook went on to suggest some possible reforms that could be made to modernize U.S. tax laws.
"While some subcommittee members may have differing views on these tax policy matters, Apple hopes the subcommittee will see that these recommendations aim to create meaningful change and go well beyond what most U.S. companies propose," Cook said.
Sen. Rand Paul, R-Ky., attacked the Senate subcommittee for "bullying" Apple, suggesting that the Senate was the real offender, according to USA Today.
"This problem is solely created by the awful tax code," Paul said. "What we're talking about is what every company in America does, and that's minimizing their tax."
In a statement to open the hearing Levin praised Apple for all of their successes while taking them to task for failing to pay their share of taxes.
"Apple is an American success story," Levin said. "It's products are justifiably well known and used throughout the world. Just like millions around the world, I carry an iPhone in my pocket. The company's engineers and designers have a well-earned reputation for creativity. What may not be so well known is that Apple also has a highly developed tax avoidance system - a system through which it has amassed more than $100 billion in offshore cash in a tax haven."
A live stream of the ongoing hearing can be seen here.
