US raises concern over American firms evading taxes

Amidst allegations that Apple is evading US taxes through overseas shell companies, the White House said this raises the broader question of American companies that ship profits and jobs overseas, a issues often raised by US President Barack Obama in the last few years.

"The broader issue is one that is of concern to the President and one that he's focused on, because in terms of the policy matters that it raises, the report by Senators (Carl) Levin and (John) McCain raises a set of broader issues around companies that ship their profits and their jobs offshore," White House Press Secretary Jay Carney said.

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"As a result, he has long championed a set of proposals to ensure that American companies cannot use offshore profit shifting to avoid paying taxes, including a proposal for a minimum tax on foreign earnings that would provide a comprehensive solution to this problem," Carney said.

"We look forward to working with Senators McCain and Levin, and anyone else who will work with us to reform our tax code in a way that makes sure that everyone is paying their fair share and that our tax code is designed to reward job creation opportunities in the United States instead of tax avoidance and profit-shifting opportunities to low-taxcountries around the world," he said.

Carney said this has been a major priority of Obama, because he thinks it is inexplicable that the US tax code would actually be written in a way that rewards companies for taking jobs and profits offshore, and thereby penalises companies for doing what the country want them to do, which is create jobs and opportunity here in the United States.

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Earlier in the day, the Apple CEO Tim Cook denied allegations of tax evasion.

"We pay all the taxes we owe, every single dollar. We not only comply with the laws, we comply with the spirits of the laws. We don't depend on tax gimmicks," he told a Senate Panel.

In his remarks, McCain alleged that in the last four years alone, Apple has avoided paying taxes on $44 billion in income.

"Today, Apple has over $100 billion, more than two-thirds of its total profits, stashed away in an offshore account. That's over $100 billion that are not currently subject to US corporate income taxes and, therefore, cannot be used to ease the deficit or help invigorate the same American economy that fostered the creation of this large corporation in the first place."

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"As the shadow of sequestration encroaches on hard-working American families, it is unacceptable that corporations like Apple are able to exploit tax loopholes to avoid paying billions in taxes," McCain said.

Cook argued that Apple's foreign subsidiaries own such a large share of the company's income and assets because of the rapid growth of its international business.

"We do have a low tax rate outside the US, but this is for products we sell outside the US," he said.