Apple [AAPL] CEO Tim Cook Denies Unfair Tax Advantage Over Smaller Companies

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On Monday night, the subcommittee took a swing at Apple by releasing a 40-page memorandum, which, after a 16-page highlights-reel, gets down to business, asserting that Apple has used a variety of "offshore structures, arrangements, and transactions to shift billions of dollars in profits away from the United States and into Ireland, where Apple has negotiated a special corporate tax rate of less than 2 percent."

"One of Apple's more unusual tactics," says the Subcommittee, has been "to establish and direct substantial funds to offshore entities that are not declared tax residents of any jurisdiction."

These entities are, in effect, corporate men-of-the-world.

One such entity, Apple Operations International, which was established in 1980, says the memo, is currently sauntering about with $30 billion in its pocket. Yet, during the four years during which it earned that sum, it "paid no corporate income taxes to any national government."

While the subcommittee stops short of accusing Apple of having broken any U.S. law, it finds the company to have circumvented the U.S. Tax Code's Subpart F, whose purpose is "to prevent multinational corporations from shifting profits to tax havens to avoid U.S. tax."

So adroitly has Apple peeled Subpart F, says the memo, that from 2009 to 2012, it managed to avoid "$44 billion in taxes on otherwise taxable offshore income."

On Monday, ABC News quoted Sen. John McCain as saying: "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."

Subcommittee chairman Sen. Carl Levin, speaking Monday with reporters, said that while Apple might be a golden goose, it had played fast and loose with some of its eggs.

"It's like saying you haven't shifted the golden eggs offshore," Levin said, "after you've shifted the golden goose offshore."

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