"We pay all the taxes we owe — every single dollar," Cook told the Senate's Permanent Subcommittee on Investigations.
"We not only comply with the laws but we comply with the spirit of the laws," he said. "We don't depend on tax gimmicks."
Cook said the tax code "has not kept up with the digital age" and restricts the free movement of capital in comparison to the codes of other countries. He called for a "dramatic simplification of the corporate tax code," including lower tax rates and a "reasonable tax on foreign earnings."
He said Apple was "deeply committed to our country's welfare."
"We are proud to be an American company, and we are equally proud of our contributions to the U.S. economy," Cook said.
The panel's chairman, Sen.
He admitted that he carries an
"Apple executives want the public to focus on the U.S. taxes the company has paid, but the real issue is the billions in taxes it has not paid, thanks to offshore tax strategies whose purpose is tax avoidance, pure and simple," Levin said.
Such tax avoidance by U.S. multinational companies hurts because it increases the federal budget deficit, forcing average Americans to make up the difference with a higher tax burden, he said.
Levin said Apple "is exploiting an absurdity" that allows three of its subsidiaries in
One of the companies, Apple Operations International, which has no employees but reported $30 billion in income over the four years, has not filed an income tax return in any country for the last five years, the subcommittee investigation found.
A second company, Apple Sales International, holds the economic rights to Apple's intellectual property in Europe, Asia and Africa. The subsidiary had $74 billion in sales income from 2009-2012 but paid less than 1% in taxes to Ireland.
The tactic, which is legal, is possible through complex cost-sharing agreements that transfer the economic rights to the valuable intellectual property behind the iPhone,
"Many U.S. companies, including Apple, use transfer pricing to shift intellectual property rights to offshore affiliates and then direct income associated with that intellectual property – taxable income that would otherwise flow to the United States where the intellectual property was developed – to the affiliates' home jurisdiction, which is typically a tax haven," Levin said.
But he said its tax strategies are "unacceptable" and hurt smaller U.S. companies that don't have the ability to shift profits to foreign subsidiaries.
McCain said Apple "has violated the spirit of the law, if not the letter of the law."
"Frankly, I'm offended by the tone and tenor of this hearing," Paul said, calling the session a "show trial." He noted that Corning makes the Gorilla Glass for Apple products in Kentucky.
"I'm offended by a $4-trillion government bullying, berating and badgering one of America's greatest success stories," he said. "Tell me what Apple's done that is illegal."
"They're doing what their shareholders ask, which is to maximize profit," Paul said.