(Tax Foundation):
Yesterday, Apple CEO Tim Cook and CFO Peter Oppenheimer testified before a Senate committee on Apple’s tax strategies. Media coverage of the hearing was heated and immediate, and Fox Business and Bloomberg reached out to Tax Foundation some insight into the debate.
U.S. multinationals are being unfairly targeted and unfairly accused of tax dodging. When Markets Now host Cheryl Casone asked Tax Foundation President Scott Hodge where the Senators got this idea in the first place, here is what he had to say. “They don’t understand how the U.S. tax system really works. They don’t understand how other tax systems work, and they don’t understand how uncompetitive the U.S. tax system is in the global economy.”
As you know, we have the highest corporate tax rate in the industrialized world, and one of the most outdated international tax systems of any country. “A lot of countries across the globe are cutting their corporate tax rates to be more competitive,” said Hodge. “They’re switching from a more outmoded worldwide tax system to a more a more friendly territorial system in order to make, not only their economies, but their companies more competitive globally. [...] Our major trading partners […] are moving forward, and we are standing still. Every day we hold these kinds of hearings is another day we fall behind.”
On Bloomberg’s Street Smart, Tax Foundation noted that, “todays hearing has shown that the tax system is broken. American multinational corporations are paying over $100 billion in taxes overseas, and if they bring money back to American, they are still liable to pay the U.S. Corporate tax rate as well. It’s making us uncompetitive.”
In discussing the tax competitiveness of our system versus those of our comptetitors, such as the UK or Japan, Pomerleau had this to say: “They have recently adopted a territorial system, and do not make their companies liable for taxes on profits made overseas.” When host Trish Regan asked if there is a risk of jobs ending up overseas due to a territorial system, Pomerleau noted that “counties that have an active territorial system have not seen losses in jobs or tax revenue, but what they have gained is competitiveness.”