Apple, former Washington wallflower, now at center of tax fight

Wed May 22, 2013 7:03pm EDT
 
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By Andy Sullivan, Gabriel Debenedetti and Poornima Gupta

WASHINGTON (Reuters) - For years, Apple Inc kept a low profile in Washington as it grew into one of the most valuable companies in the world. Now the iPad maker has taken the lead, perhaps inadvertently, on a top priority for U.S. business: simplifying America's tax code.

Chief Executive Tim Cook, who was called before the Senate Permanent Subcommittee on Investigations on Tuesday to answer questions about Apple's alleged tax avoidance, used his appearance to plead for an overhaul of corporate taxes. That marked a sharp turnabout for a company that until now has been content to let rivals like Google and Microsoft fight Washington policy battles.

And even though the scrutiny Apple has come under in Washington could further challenge the company as it copes with a sagging stock price, rising competition and questions about its labor practices, it may have little choice but to commit fully to the fight over the corporate tax code.

"They are very, very tactical," said a former Apple lobbyist who asked for anonymity because he was not authorized to speak for the company. "They only join issues they really care about."

Recently, Apple has backed unsuccessful legislation that would have allowed international companies to bring overseas profits back home without paying the 35 percent corporate income tax.

Repatriation of profits has been a top concern for U.S. companies, which collectively have more than $1.5 trillion sitting offshore. Most say they keep the money there to avoid the taxes they would face by bringing it home.

Bowing to increasing shareholder pressure to distribute some of the $100 billion it keeps overseas, Apple has opted to borrow money at low interest rates rather than bring the cash home and take the tax hit.

Apple's Washington office referred questions to its California headquarters. Officials there declined to comment.   Continued...

 
Apple CEO Tim Cook is pictured during a Senate homeland security and governmental affairs investigations subcommittee hearing on offshore profit shifting and the U.S. tax code, on Capitol Hill in Washington, May 21, 2013. REUTERS/Jason Reed