Something’s got to give when it comes to the U.S. corporate tax. I’ve written a number of articles over the past year citing isolated examples where the corporate tax code is simply unsustainable for U.S.-based multinational corporations. But, now, the evidence is starting to mount, providing something more than anecdotal evidence that large corporations have reached a breaking point with corporate taxes.
As 2015 came to a close, it became clear that we were at the flash point for a major trend: unless something changes soon, multinational corporations are going to start voting with their passports and incorporating in foreign countries.
Need proof? Look no further than the comments made by Apple AAPL -2.94%’s typically mild-mannered CEO Tim Cook, when interviewed in December on CBS’ 60 Minutes. When asked whether Apple is engaged in a scheme to pay little or no taxes on $74 billion in overseas revenue, Cook responded bluntly:
“That is total political crap. There is no truth behind it. Apple pays every tax dollar we owe. We pay more taxes in this country than anyone.”
Cook was then pressed on why Apple hasn’t repatriated its overseas income into the U.S., to which he responded:
“I’d love to bring it home… It would cost me 40% to bring it home, and I don’t think that’s a reasonable thing to do. 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. It’s past time to get it done.”
Cook, of course, is CEO of the company with the largest market cap in the world, which happens to be based in San Jose, CA. As a result, his company must consciously find ways to invest its enormous sums of overseas profits in companies that are located outside of the U.S. Surely, that cannot be good for home-grown innovation.