America’s tax code is not fit for the digital age, says Apple CEO Tim Cook

21 Dec 20157 Shares

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Tim Cook visiting the historic library at Trinity College Dublin last month

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The US’ tax code is outmoded and out-of-date, fit for the industrial age and not the digital age, said Apple CEO Tim Cook in an interview on the major prime time TV show 60 Minutes in the US. He dismissed criticism of Apple’s tax affairs as “political crap”.

Cook was responding to questions by the CBS veteran reporter Charlie Rose on 60 Minutes about a belief by members of the US Congress that Apple pays little or no tax on the $74bn in overseas revenue held by Irish subsidiaries of Apple.

“That is total political crap. There is no truth behind it. Apple pays every tax dollar we owe,” Cook said during the insightful report that looked inside Apple’s Cupertino headquarters in California, including inside Jony Ive’s design studios and the culture of secrecy at Apple.

“One of the great things about Apple is we probably have more secrecy here than the CIA,” Cook quipped.

‘This is a tax code that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago’
– TIM COOK, APPLE

Both Ireland and Apple are awaiting the outcome of an EU investigation into Apple’s tax affairs early in the New Year. Apple has been based in Ireland since 1980 and employs 5,000 people in Cork, with another 1,000 new jobs on the way.

Responding to Rose’s questions about claims Apple is a tax avoider, Cook responded: “What I told them and – what I’ll tell you and – and the folks watching tonight is we pay more taxes in this country than anyone.”

Cook said that because two-thirds of Apple’s business is outside the US it makes more money overseas than any other US company.

While he said he’d love to bring much of that business back to the US, it would be impossible. “Because it would cost me 40pc to bring it home. And I don’t think that’s a reasonable thing to do. This is a tax code, Charlie, that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago. It’s past time to get it done.”

Countering a question about Apple being engaged in a sophisticated scheme to pay little or no corporate taxes on the $74bn held overseas, Cook said: “That is total political crap. There is no truth behind it. Apple pays every tax dollar we owe.”

The spirit of Steve Jobs is still alive at Apple

In the report, Rose got more access to the inner workings of Apple than any other journalist to date. Cook agreed that the DNA of Steve Jobs is still baked deeply into the company.

“This is still Steve’s company. It was born that way, it’s still that way. And so his spirit I think will always be the DNA of this company.

The report got access to Jony Ive’s design studio which consists of 22 designers. It is a close-knit group and in 15 years only two have left the company.

Designers revealed how every millimetre in a block of aluminium used in a CNC machine to mill prototypes of devices like the Apple Watch or iPhone hold immeasurable value to the company. “All of these things I think in aggregate, if we manage to get them right, you sort of sense that it’s an authentic, really thoughtfully conceived object.”

The report also showed how the layout and furnishings of Ive’s studios are identical almost to the furnishings of Apple stores around the world with their distinctive wooden tables.

‘You need each of these products to try to fight for their space, their time with you. The iPhone has to become so great that you don’t know why you want an iPad’
– PHIL SCHILLER

Apple’s head of retail Angela Ahrendts said this was all by design to create an intrinsic link from product’s inception to its purchase by consumers.

Apple even keeps a fully stocked Apple Store hidden in an unmarked warehouse off the main campus where layouts, presentation and interactions with customers are being constantly refined and rehearsed.

“The most important goal is, is that it is dynamic,” Ahrendts said. “People are used to living on their phone. So they’re used to being dynamic, emotive, immersive. And so how do we make sure when they walk into a store they say, ‘Wow’?”

The report also broached the long-held view that Apple deliberately cannibalises its own products, for example, how the iPhone is slowly killing the iPod touch.

Apple’s head of marketing Phil Schiller confirmed this. “It’s not a danger, it’s almost by design. You need each of these products to try to fight for their space, their time with you. The iPhone has to become so great that you don’t know why you want an iPad. The iPad has to be so great that you don’t know why you why you want a notebook. The notebook has to be so great, you don’t know why you want a desktop. Each one’s job is to compete with the other ones.”

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com