Apple Is Extremely Good at Finding Tax Loopholes, Senate Investigation Finds

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Photo: Justin Sullivan/Getty Images2012 Getty Images

The U.S. government hasn't actually accused Apple of a crime in what a Senate investigation called a "complex web" of offshore subsidiaries that it allegedly used to shield itself from paying taxes on $74 billion. But members of Congress had plenty of other colorful ways to describe the network of "gimmicks" and "schemes" the company used, which they said included setting up unmanned subsidiaries in Ireland that were basically exempt from even filing tax returns. Sen. Carl Levin said Apple was seeking "the holy grail of tax avoidance" by creating billion-dollar offshore companies "while claiming to be tax resident nowhere." But Apple CEO Tim Cook plans to deny any wrongdoing when he testifies on Tuesday.

The company's prepared testimony states that it broke no laws and "does not use tax gimmicks." Cook told the Washington Post last week that he would use his testimony to advocate for a simpler tax structure with lower rates. "We are not proposing that it be zero. I know many of our peers believe that. But I don’t view that. But I think it has to be reasonable," Cook told the paper. "Apple has a very strong moral compass, and we believe in really good corporate citizenship."

But when he starts his testimony, it will be as someone accused of heading up a company Sen. John McCain said was, "by sheer size and scale ... also among America’s largest tax avoiders."