Apple CEO Tim Cook is a Silicon Valley liberal, but, while he probably wouldn't put it this way, he is closer to Donald Trump and conservatives on corporate tax reform.
Apple keeps a lot of its cash overseas because of the U.S. corporate tax rate (35 percent, the highest in the developed world). Cook is unapologetic:
Apple CEO Tim Cook struck back at critics of the iPhone maker's strategy to avoid paying U.S. taxes, telling The Washington Post in a wide ranging interview that the company would not bring that money back from abroad unless there was a "fair rate."
Along with other multinational companies, the tech giant has been subject to criticism over a tax strategy that allows them to shelter profits made abroad from the U.S. corporate tax rate, which at 35 percent is among the highest in the developed world.
Cook's thoughts on corporate tax and the companies that keep money overseas–called "Benedict Arnold companies" by John Kerry when he was running for president–were part of a wide-ranging interview with the Washington Post. Here is a nugget from the interview:
What do you say in response to Nobel economist Joseph Stiglitz’s comments on Bloomberg [television], where he called Apple’s profit reporting in Ireland a “fraud”?
I didn’t hear it. But if anybody said that, they don’t know what they’re talking about. Let me explain what goes on with our international taxes. The money that’s in Ireland that he’s probably referring to is money that is subject to U.S. taxes. The tax law right now says we can keep that in Ireland or we can bring it back. And when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we’re in, which is about 5 percent, so think of it as 40 percent. We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law. It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.
And so what we’ve said — we think it’s fine for us to pay more, because right now we’re paying nothing on that and we leave it over there. But we — like many, many other companies do — wait for the money to come back.
In the meantime, it’s important to look at what we do pay. Our marginal rate, our effective rate in the U.S. is over 30 percent. We are the largest taxpayer in the United States. And so we’re not a tax dodger. We pay our share and then some. We don’t have these big loopholes that other people talk about. The only kind of major tax credit that we get is the R&D tax credit, which is available to all companies in the United States. That’s important to know. The second thing I would point out is we have money internationally because we have two-thirds of our business there. So we earn money internationally. We didn’t look for a tax haven or something to put it somewhere. We sell a lot of product everywhere. And we want to bring it back, and we’ve been very honest and straightforward about that.
How long are you willing to keep unrepatriated income overseas?
Honestly, I believe the legislature and the administration will agree that it’s in the best interest of the country and the economy to have tax reform. So I don’t think I have to make that decision. I’m optimistic that it will take place next year.
Cook may be optimistic that the corporate tax will be reduced no matter which party wins the White House. I hope he is right. Having corporations brings their money to the U.S. would help the economy.
But it should be noted that one candidate (the Republican) proposes to cut the corporate tax to 15 percent, while the other candidate has yet to address this particular issue.