Did Obama and Apple’s Tim Cook discuss tax loopholes?
We consider likely topics of debate when President Obama and Apple boss Tim Cook spoke last weekend
CNN Money has been speculating about newly re-elected President Obama’s chat with Apple boss Tim Cook last weekend, and it suspects that Apple’s tax strategies may have been brought up.
After securing his second term as US leader, Barack Obama promptly met with or called more than a dozen major company executives to discuss economic strategies as the nation faces up to what many call a ‘fiscal cliff’ in the near future.
Election pledges, not to mention Tim Cook’s White House campaigns in the past, strongly suggest that the subject will have involved tax: both men have talked about the necessity for altering the US structure in a way that will reward companies for ‘repatriating’ their earnings.
Alleged tax avoidance has been the source of widespread public outcry recently. Apple, along with Starbucks, Google and Amazon, has seen its tax arrangements come under the spotlight, with widespread anger over the low tax rate it has managed to pay on its enormous worldwide profits by canny overseas holdings and a complex structure of subsidiaries.
Tax filings last month revealed that Apple paid less than 2 percent tax on its overseas earnings in the past 12 months, compared to a federal tax rate of 35 percent back home.
As we reported earlier this month, “The claims are based on figures revealed in Apple’s Form 10-K, filed with US regulator last week. That filing shows that Apple paid just $713m (£445m) in overseas corporation tax on its foreign profits of $38.87bn (£23bn) in the past 12 months.
“That’s 1.9% tax on foreign earnings that were up 53% compared to fiscal 2011. In 2011 Apple earned $24 billion outside the US and paid income tax of 2.5% on it, according to the Associated Press.”
Both Obama and Cook would like to find a way to encourage US firms to bring those earnings back home without scaring the companies off with punitive tax rates.
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