Preview: Grilled Apple on the Menu

Preview: Grilled Apple on the Menu

... [T]he tax policy issues that are subject of this [week's Senate Permanent Subcommittee on Investigation's [PSI] hearing on multinationals' cross-border profit shifting] are enormous. Of all the big-money issues for corporations and the IRS, this is the largest. The committee's star witness will be Apple CEO Tim Cook.

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... [T]here is likely to be news at the PSI hearing. First of all, because the committee has the powers of subpoena, we are likely to learn details of Apple's tax planning that otherwise would be hidden from the public. Second, Mr. Cook has already revealed to the press (here and here) that he will make a new proposal to reform U.S. international taxation.

That proposal is likely to be some sort of revised version of the temporary "one-time" "tax holiday" Congress granted multinationals in 2004. Under such a proposal multinationals--who now are not bringing their foreign profits back to the United States because they would be required to up to 35 percent--would be able to bring profits home at a reduced rate if they put the funds to good use in the United States. I am guessing Cook will be proposing something like this with a holiday rate of 10 percent.
It is not a terrible idea, and hopefully Cook and other multinationals will not oversell its benefits like they did the last time.

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... Cook is also likely to say... Apple does not shift profits out of the United States.

This last assertion, assuming he makes it,
I believe is absolutely wrong...

Another thing worth noting is that Cook is appearing instead of Apple's director of taxes. To me this is an indication of how important it is for a company that sells directly to consumers to not have its reputation damaged...

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View Marty Sullivan's opinion in its entirety on the taxanalysts® Blog.

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