Senator Carl Levin (D-Mich.) came out with a strong opening statement claiming that Apple’s cost sharing agreements with its foreign subsidiaries were utilized primarily to avoid paying any taxes at all. Levin says that Apple utilized cost sharing agreements to shift Apple’s profits offshore. Apple granted its foreign subsidiaries intellectual property rights to its products in order to allow them to have profits from them transferred to their bank accounts.
Apple also negotiated an income tax rate of 2% with Irish tax authorities, well under Ireland’s 12% and that of other European nations. It shifted 36 billion of U.S. income away from the United States in order to avoid taxes according to Senator Levin.