Apple's Tim Cook Wants to Repatriate Overseas Cash at Lowered Rate
Apple pushes for a major tax change that it says will boost the U.S. economy: CEO Tim Cook plans to call on Congress next week to dramatically simplify corporate tax laws.
His main focus is to make it less costly for Apple (AAPL) and other tech companies to repatriate huge piles of cash sitting overseas.
In interviews with The Washington Post and Politico, Cook said Apple would invest the money in job creation and research and development.
Apple has more than $100 billion stashed overseas. Under current law, it would need to pay a 35 percent tax rate on profits to bring that money back home.
Cook says he is not proposing that companies bring that money home without paying any tax, but he says the rate "has to be reasonable."
He will testify on Tuesday before a Senate subcommittee, and he may not receive an altogether warm welcome. Last year the panel gave officials from Microsoft (MSFT) and Hewlett-Packard (HPQ) a tongue-lashing for avoiding tax payments.
All told, a report from JPMorgan (JPM) estimates that U.S. companies hold $1.7 billion in earnings overseas.
But Cook claims that Apple is not averse to paying reasonable taxes. He says the company is likely the largest corporate taxpayer in the U.S., and will incur a federal tax bill of about $7 billion dollars this year.
The big question for Congress is whether lowering the rate on companies bringing money back home would lead to those funds being spent in a productive way. Critics doubt the cash would be used to expand and create jobs.
The controversy of tax avoidance is also getting lots of attention overseas. The British parliament lambasted Amazon (AMZN) and Google (GOOG) this week over their low tax bills.
Reuters reports that over the last six year, Amazon has paid just $9 million dollars in taxes on more than $23 billion in sales to British clients. That's because the company operates all of its European operations out of Luxembourg, where it pays a much lower tax rate.
-Produced by Drew Trachtenberg