Apple CEO Tim Cook to senators: ‘We don’t depend on tax gimmicks’ [video chat]

WASHINGTON -- Apple CEO Tim Cook defended the company’s tax avoidance strategies in an appearance Tuesday before the U.S. Senate’s Permanent Subcommittee on Investigations.

Wearing a business suit, white shirt and powder blue tie, Cook read an opening statement. He was followed by Apple’s chief financial officer, Peter Oppenheimer. A third Apple exec, Peter Bullock, head of tax operations, was also on hand to answer questions but did not read an opening statement.

Cook, as expected, began by extolling Apple’s growth and its contributions to the U.S. economy.

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“You can tell the story of Apple’s success in just one word: innovation,” Cook said.

He added: “To our knowledge Apple is the largest corporate taxpayer in America. We paid $6 billion in cash to the U.S. Treasury -- that’s $16 million each day. And we expect to pay even more this year.”

He stressed that despite a report from the subcommittee that Apple used its Irish subsidiaries to avoid billions in U.S. taxes: “We don’t depend on tax gimmicks.”

“We not only comply with the laws, but we comply with the spirit of the laws,” Cook said.

Cook also said Apple takes its social responsibility seriously, arguing that the company attempts to be a leader in environmental issues, education and human rights.

“Our belief that innovation should serve humanity’s highest values and deepest aspirations is not going to change,” Cook said.

“Apple is a company of strong values,” Cook said. “We believe our extraordinary success brings increased responsibilities to the communities where we work.”

Cook added: “We enthusiastically embrace the belief, as President Kennedy said, ‘to whom much is given, much is required.’ ”

The real issue, Cook said, was the U.S tax system: “The tax code has not kept up with the digital age.”

Cook said Apple had thrived by keeping things simple, and Congress should do the same with the tax code. Eliminate loopholes, reduce overall rates, and make it attractive to bring overseas cash back to the United States.

“We make this recommendation with our eyes wide open, understanding that this would likely result in an increase in Apple’s U.S. taxes,” Cook said.

Once questioning started, Cook found himself cut off a couple of times. And he was pressed on whether the fact that parts of Apple may not pay U.S. taxes could be viewed was unfair.

“I see this as a very complex topic,” Cook said. “Honestly speaking, I don’t see it as unfair. I am not an unfair person. I would not preside over that.”

The appearance of Cook followed an appearance by a panel of tax experts during which senators used words like “tax freeloaders” when discussing Apple’s tax practices.

The exchange initially with the subcommittee was, if not totally cordial, also not overtly hostile. Earlier a senator had accused the panel of bullying Apple into appearing. Cook said that was not the case.

“I feel very good to be participating in this,” Cook said. “And I hope to help the process. I really would like comprehensive tax reform to be passed this year. I think it is important to tell our story. And I would like people to hear directly from me. I was not dragged here.”

During a short break in the hearing, Cook worked the room. He chatted with Sens. Kelly Ayotte (R-N.H.) and Ron Johnson (R-Wis.).

When questioning resumed, Sen. Claire McCaskill (D-Mo.) asked Cook how much it would cost Apple to leave the U.S. for a country with a lower taxes.

Cook said it was something he couldn’t ever imagine doing, adding: “And I have a pretty wild imagination.”

“We’re an American company,” Cook said, “and we’re proud to be an American company.”

Join us for a live video chat on Cook’s testimony at 3 p.m. with technology reporter Chris O’Brien and consumer columnist David Lazarus.

Puzzanghera reported from Washington. O’Brien reported from San Francisco.

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