Image Source: Apple

Apple Executives Grilled By Senate As Corporate Tax Code Comes Under Scrutiny

on Tuesday, May. 21st

Uneasy lies the head that wears the crown.

Being the most profitable technology company in the world makes you a target for everyone: corporate rivals, pundit haters, and Senate permanent subcommittees on investigations.

For Apple that has meant coming under heavy fire by the U.S. Senate for the way that they handle their cash. Ars Technica sets the scene wherein Apple CEO Tim Cook faced the political heat:

Senator Carl Levin (D-MI), who chairs the Senate subcommittee where Cook testified, opened the proceedings today by suggesting that Apple has avoided paying $9 billion in taxes with strategies like those seen at the Irish subsidiaries.

Cook and company attempted to get ahead of the story over the past few days, even releasing the full testimony they set out to give to the panel. What's at stake isn't the reputation of Apple, but the structure of the entire U.S. corporate tax code, and perhaps the corporate tax codes of the rest of the world as well.

For decades now multinational companies have been playing a perfect legal shell game wherein they seek the most friendly shores for hoarding their cash. In a corporate environment where the slightest advantage over your rivals can mean millions–even billions–of dollars in capital gained on the markets it is rational to seek shelters.

The problem is that when corporations do this, the governments of the nations in which they operate have less access to that tax base. Which can have detrimental effects on the nation's infrastructures.

In other words: Apple isn't the only company that has some shady looking tax shenanigans going on. The documentary We're Not Broke dug into this topic last year, and remains a good primer on the topic.

For the global perspective, hear former US Labor secretary Robert Reich talk about corporate tax avoidance on the BBC.

Image Source: Apple

Follow Noah Nelson on Twitter (@noahjnelson)

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