Apple CEO Wants Drastic Changes in Tax Laws

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With less than a week to prepare for his appearance at a Senate hearing that is looking into Apple’s (NASDAQ:AAPL) offshore tax practices, CEO Tim Cook has announced that he plans to ask for a corporate tax law overhaul while he is in Washington. According to the Washington Post, Cook is seeking a “dramatic simplification” of the current corporate tax laws and will offer up several specific changes he believes will encourage more companies to repatriate overseas earnings.

Apple currently keeps approximately $100 billion of its cash reserves overseas and out of the reach of America’s tax collectors. Apple could face a corporate tax rate of 35 percent under current U.S. tax laws if it tries to bring its cash into the U.S.

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Apple is definitely not alone in using this type of tax-avoidance strategy. JPMorgan (NYSE:JPM) estimates that over 1,000 U.S. companies hold a combined $1.7 trillion in overseas earnings.

Although many companies share Cook’s view that the corporate tax rate should be lowered, it’s not clear whether this would actually change most companies’ tax-avoiding tendencies. Allan Sloan at CNN Money notes that a 12 percent corporate tax rate reduction in 1986 had little to no effect on most companies’ inclinations to play overseas tax games.

Other than a promise to outline specific measures during his appearance in front of the Senate Permanent Subcommittee on Investigations, Cook has offered no further details on his vision for a reformed corporate tax code. Via The Washington Post, Cook noted that “Apple likely is the largest corporate taxpayer in the U.S.” Apple paid $6 billion in federal corporate income tax last year and is on route to pay $7 billion in federal taxes this year.

Apple closed up 1.33 percent, or $5.71, at $434.56 on Thursday.

Here’s how Apple traded on Friday:

Screen Shot 2013-05-17 at 3.35.30 PM

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