Commentary

Apple's Cook Shines At Senate Hearing

Surely you’ve heard the adage that “80% of success is showing up.” Apple CEO Tim Cook seemingly proved that point yesterday by testifying before a Senate panel prepared to excoriate Apple for taking advantage of the existing tax code to the hilt. 

“By the time Mr. Cook walked out, the big cats on a Senate committee were practically eating out of his hand,” write Nelson D. Schwartz and Brian X. Chen in the New York Times.

The headlines have been preparing us for a shootout in the Senate Permanent Committee on Investigations Corral in a thriller titled “Offshore Profit Shifting and the U.S. Tax Code - Part 2 (Apple Inc.).

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“Apple relied on a ‘complex web of offshore entities’ and U.S. tax loopholes to avoid paying billions of dollars in U.S. taxes on $44 billion in offshore income over the past four years, according to excerpts from a Senate subcommittee report to be released tomorrow,” ForbesConnie Guglielmo and others informed us Monday.

Not that it was a big secret. In April 2012, the New York Times’ Charles Duhigg and David Kocieniewski, with contributions from correspondents in far-flung tax havens around the world, wrote a story that carried the hed, “How Apple Sidesteps Billions In Taxes.” It has attracted nearly 1,400 comments.

“Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill-suited to today’s digital economy,” Duhigg and Kocieniewski wrote. 

“It's important to tell our story, and I'd like people to hear directly from me," Cook told the panel yesterday during questioning by Sen. John McCain (R-Ariz.). Apple pays "all the taxes we owe -- every single dollar,” he claimed, recounts the AP’s Nelson D. Schwartz.

“Cook seemed to blunt much of the outrage by simply making the decision to appear,” write Chris O'Brien and Jim Puzzanghera in the Los Angeles Times. “Wearing a business suit, with a white shirt and powder blue tie, Cook delivered remarks aimed at portraying Apple as a company bound by lofty ideals, a strong moral compass and a recognition of its impact on the world.”

"I love Apple," responded Sen. Claire McCaskill (D-Mo.). "I harassed my husband until he converted to a MacBook."

“I'm offended by the spectacle of dragging in Apple executives,” said Sen. Rand Paul, (R-Ky.). “What we need to do is apologize to Apple and compliment them for the job creation they're doing.”

It wasn’t all peaches and cream for Cook, of course. “Apple's Tax Ingenuity A Tough Sell For Senate Critics” reads the hed over Kevin McCoy’s write-up in USA Today

“‘It's unfair. It needs to change,’ Sen. Carl Levin, D-Mich., the subcommittee chairman, said of the tax strategies used by Apple and many other multinational U.S. firms. ‘We should close these unacceptable offshore tax loopholes.’

“Tempering his comments with praise of Apple's tech ingenuity, McCain, the panel's ranking Republican, nonetheless said, ‘In my view, Apple has violated at least the spirit of the law, if not the letter of the law.’”

But they, too, were equivocal in their criticism of Apple. 

“‘We love the iPhone and the iPad,’ Mr. Levin said, going on to commend Mr. Cook and two other executives for voluntarily appearing before the Senate Permanent Committee on Investigations,” the New York TimesSchwartz and Chen write. “‘I know it’s not easy to come in front of a spotlight but it’s important for us.’

“Other senators seemed even more mollified by Mr. Cook’s low-key performance,” they continue, citing McCain telling Cook: “You managed to change the world, which is an incredible legacy for Apple.”

Communications coach Carmine Gallodeconstructs Cook’s testimony in Forbes, observing that he “is a skilled communicator and today he put on a display on how to handle tough questions.” 

Gallo elaborates on five effective techniques Cook employed:

  • Be a part of the solution;

  • Be respectful, not defensive;

  • Reframe the question;

  • Put the data in perspective;

  • Confident body language.

Apple realizes, of course, that simply defending the status quo is a no-win proposition.

“What does Apple want?” Daily Tech’s Tiffany Kaiser asks, then answers: “A tax system that is ‘revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings that allows free movement of capital back to the U.S.’”

And what’s wrong with hedging your bets? Let’s return for a moment to the sage who gave us the advice about success that we quoted in our lede. “I don't believe in an afterlife,” Woody Allen once said, “though I am bringing a change of underwear.”

2 comments about "Apple's Cook Shines At Senate Hearing".
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  1. Maarten Albarda from Flock Associates (USA), May 24, 2013 at 8:47 a.m.

    So let me try and understand. The voters vote in the legislators. The legislators create a tax code full of loopholes. Companies then use these loopholes for financial gain. Voters are angry with sequesters, big business fat cats and the financial world in general as they fear for their financial future. So the legislators cry wolf and try to shame companies into admitting tax avoidance. But are also against closing the loopholes. We are so messed up...

  2. Michael Gothie from Verizon Wireless, May 24, 2013 at 2:08 p.m.

    "Anyone may arrange his affairs so that his taxes shall be as low as
    possible; he is not bound to choose that pattern which best pays the
    treasury. There is not even a patriotic duty to increase one's taxes.
    Over and over again the Courts have said that there is nothing sinister
    in so arranging affairs as to keep taxes as low as possible. Everyone
    does it, rich and poor alike and all do right, for nobody owes any
    public duty to pay more than the law demands." Judge Learned Hand, US Court of Appeals

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