Apple Inc. (NASDAQ:AAPL) CEO Tim Cook has released a statement targeting people who have been criticizing his firm over its strategy to avoid paying taxes in the US.
In an interview with The Washington Post, Cook stated that Apple would not bring back its profits into the US unless there was a fair rate. Apple and other tech firms have received a lot of criticism about tax strategies that give them leeway to shield the profits they make abroad from being subjected to the US Corporate tax rate. The latter is currently at 35% which makes it one of the highest corporate tax rates charged by developed countries. No wonder Cook doesn’t want to repatriate his company’s profits.
Though Apple’s decision complies with the letter of the law, some critics have come forward and described Apple as a tax evader, though it is unclear why this is bad for consumers of Apple products. According to the nonprofit Citizens for Tax Justice, major firms have saved more than $2 trillion in offshore accounts and this is revenue that is taxable in principle. Some of the supporters of the higher US tax rate suggest that it is unpatriotic for firms to carry out such practices to avoid the tax, though it is also unclear how patriotism is good for consumers of Apple products if such patriotism will wipe out 35% of profits that would and are otherwise reinvested in improving Apple’s technology.
Cook responded with a statement that it is not a matter of patriotism anyway, citing that it does not mean that those that pay higher taxes are more patriotic than those who pay lower taxes.
The CEO, however, acknowledged that his company has indeed been taking advantage of the tax loophole which he also noted is completely legal. Cook stated that Apple has the right to decide whether to store the profit made abroad in Ireland or bring it into the US. Cook also stated that it is the mandate of the President as well as Congress to come up with a tax reform and he believes that there is a high likelihood that it will take place in 2017. The CEO’s statement are expected to cause a host of other debates about taxes.