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The hearing of the Senate Permanent Subcommittee on Investigations started off with some flashes of anger. Republican Sen. Rand Paul of Kentucky had some sharp words after chairman Democratic Sen. Carl Levin delivered his opening statement, saying: "Apple executives want to focus on the taxes it has paid, but the real issue is the billions that Apple has not paid."
Paul declared the subcommittee's objective seemed to be "to bully one of America's greatest success stories. [...] If anyone should be on trial here, it is Congress." He also said "I frankly think the committee should apologize to Apple." All through Paul's comments Levin could be seen becoming increasingly angry. He ultimately told Paul "you are free to apologize if you wish."
Upon release of the report about Apple's dodging taxes Monday, Levin said:
"Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere. We intend to highlight that gimmick and other Apple offshore tax avoidance tactics so that American working families who pay their share of taxes understand how offshore tax loopholes raise their tax burden, add to the federal deficit and ought to be closed."For the most part, senators seemed more into getting their names in the press than asking probing questions, not a habit confined to this particular subcommittee.
No senator accused Apple, which employs tens of thousands of people and paid $6 billion in U.S. taxes in 2012, of breaking any laws. That's one of the problems with the tax code. What the company and dozens of other multinationals do is perfectly legal and the accounting practices are of the sort that causes glazing over among citizens who might otherwise be motivated to press for change.
At the crux of the government's report? Apple's offshore entity, Apple Operations International, is formally based in Ireland. But most of its business is conducted in the United States. From 2009 to 2001, the government report stated, even though AOI's made up 30 percent of Apple's worldwide net income, it paid no U.S. taxes. Please continue below the fold for more on this story.
