Apple Inc. (AAPL) Stock Sinking as Cook Complains About “Crap”

Tim Cook doesn’t often lose his cool, but he got surprisingly riled up while discussing claims that Apple is doing its best to avoid paying taxes on overseas earnings during an interview with “60 Minutes'” Charlie Rose. Cook described the tax avoidance accusations as “total political crap”, and deflected blame on the USA tax code for being far outdated.

The empassioned response from Cook followed Rose contending that many members of Congress believe Apple is perpetuating a scheme to pay little or no taxes on $74 billion in overseas revenue.

Cook defended Apple’s revenue practices by explaining that the overseas revenue of the company is kept out of the U.S. because otherwise, for bringing that revenue to the country, the company will pay 40 percent tax; thanks to the US’ “industrial age” system. The Apple story will be broadcast on “60 Minutes“, Sunday at 7:30 p.m. ET and 7 p.m. PT. Like most US multinational corporations, Apple keeps that overseas income in foreign subsidiaries, to avoid USA taxes.

More than two-thirds of the money Apple’s iTunes makes outside North America goes through the group’s Luxembourg holding company where it is not taxable, thanks to an intra-group fees agreement signed in 2008, tax documents obtained by The Australian Financial Review in 2014 show. “It’s backwards. It’s bad for America”, Cook said.

Former U.S. Sen. Carl Levin, D-Mich., in 2013 accused Apple of shifting “billions of dollars in profits offshore” that should be subject to U.S. taxes. “And I don’t think that’s a reasonable thing to do”. It should have been fixed many years ago.

“This is a tax code, Charlie, that was made for the industrial age, not the digital age”, Cook said. “It’s past time to get it down”, he said.

Protecting privacyOn another issue, Cook said his stance on letting the government have a window into its customers’ private communications has not changed since the Paris attacks.

TIM COOK: What I told them, and what I’ll tell you and the folks watching tonight, is: We pay more taxes in this country than anyone.

Rebecca Lester, assistant professor of accounting at the Stanford Graduate School of Business, thought Cook’s colorful language might reflect frustration about the lack of movement on tax reform in Washington.