The Senate Subcommittee on Investigations is holding a hearing this morning on Apple’s tax avoidance strategies. Rand Paul set the ringmasters back on their heels with an opening statement that questioned the whole rationale for the hearing. Here is Paul’s opening statement:
For those who lack the patience to watch it (that often describes me when it comes to videos), here is the transcript, supplied by Paul’s office:
I am offended by the tone and tenor of this hearing. I am offended by a $4 trillion government bullying, berating and badgering one of America’s greatest success stories.
Tell me one of these politicians up here that doesn’t minimize their taxes. Tell me a chief financial officer that you would hire if he didn’t try to minimize your taxes legally. Tell me what Apple has done that is illegal.
I am offended by a government that uses the IRS to bully groups such as the Tea Party but I am also offended by a government that convenes a hearing to bully one of American’s success stories.
I am offended by the spectacle of dragging in here executives from an American company that is not doing anything illegal. If anyone should be on trial here, it should be Congress.
I frankly think the Committee should apologize to Apple. I frankly think Congress should be on trial here for creating a bizarre and byzantine tax code that runs into the tens of thousands of pages, for creating a tax code that simply doesn’t compete with the rest of the world.
This committee will admit: Apple has not broken any laws. Yet, they are forced into a show trial at the whims of politicians, when in fact; Congress should be on trial for chasing the profits of great American companies overseas. You haul before this committee one of America’s greatest success stories and you want applause?
I say, instead of Apple executives, you should have brought in a giant mirror, so we could look at the reflection of Congress because this problem is solely and completely created by the awful tax code.
If you want to assign blame, the Committee needs to look in the mirror and see who created this mess, see who created the tax code that drives American companies overseas.
Our corporate tax is more than double Canada’s. I never thought I would be complimenting Canada’s tax code – our tax code is double Canada’s. Our corporate tax is over ten points higher than Europe. Instead of saying theirs is too low, why don’t we set about to work that ours is too high.
Apple has 600,000 jobs they’ve created, American jobs and we want to drag them before this committee to chastise them. I find it abominable. Just in my state, we have $700 million in sales from Dow Corning. They make Gorilla Glass.
They were virtually out of business. In the 1990s, Apple struggled – if I had to guess, unfortunately, I didn’t guess enough to invest in Apple, but the thing is that in the ‘90s, people were worried they might go out of business. You know they had one computer that wasn’t doing well and then all of a sudden the innovation that came about. And we want to bring them forward and chastise them for their success.
A couple years, we did repatriation of foreign capital. If we want the capital to come home, don’t double tax it. We tax it 35 percent. Let’s tax it at 5 percent.
I have a bill that would repatriate profits from foreign companies at 5 percent and put it into infrastructure. Our country is woefully short of money for infrastructure. But you’re not going to get it at 35 percent— you are getting zero. Let’s make it 5 percent and create and infrastructure fund.
There are probably 70 votes for that in Congress but nobody will bring it up. Why? They say, “Oh, it’s the sweetener for overall tax reform, which is illusive and a hill too tall to climb that it never seems to get here.”
Why not tomorrow pass it? Why do you think people are frustrated with Congress? Because we don’t do the right thing. Everybody admits, even those that want to drag Apple before this committee, they admit that the tax code is our problem.
But if we had repatriation at 5 percent, then they would bring money home. Why don’t we just pass it? Instead it has to be revenue neutral, scored by the CBO – just pass it if it’s the right thing to do.
I would say what we really need to do is to apologize to Apple, compliment them for the job creation they are doing, and get about doing our job.
Look in the mirror and let’s make the tax code better, fairer, and more competitive world-wide. Money goes where it is welcome and currently our tax code makes money not welcome in our country.
Thank you, Mr. Chairman.
Later on, when it came to his turn, Sen. Paul delivered an oration that I thought was even better; I will put it up later, if possible. The leaders of the lynch party, Carl Levin and John McCain, felt obliged to say that they are not vilifying Apple but are merely trying to shed light on the workings of the tax code. McCain delivered a rather sickening paean to Levin, and Claire McCaskill thanked him effusively for his bipartisanship.
I was never much of a fan of Ron Paul, to put it mildly, and I initially viewed his son with some skepticism. But it won’t take many performances like today’s to make me one of Rand Paul’s biggest fans.
Tim Cook is testifying now. He points out that Apple is the largest corporate taxpayer in the U.S., having paid $6 billion in income taxes last year. He concludes his opening statement with a rather impassioned plea for tax reform.
UPDATE: Ron Johnson and Kelly Ayotte are also doing an excellent job. Basically the hearing is turning into a teaching opportunity for Apple’s executives–now what Carl Levin had in mind.
Here is Senator Paul questioning a tax professor; this is what I referred to earlier:
UPDATE: Carl Levin tried to salvage the situation by going on an endless, repetitive soliloquy in which he misstated the facts relating to Apple’s overseas operations and didn’t give the Apple executives an opportunity to correct him. He then declared the panel at an end. That is the advantage, I guess, of being the committee chairman.