A round of questioning of the Professor Richard Harvey of Villanova and Stephan Shay of Harvard followed their testimony.
There was an agreement between the two that the Apple tax system was designed to shift profits overseas for lower tax purposes, a charge that Apple denies. But professor Shay says that it “strains credulity” that Apple would engaged in such schemes that gave up parts of its intellectual property with a independent identity for which there would be no tax benefit. Shy says this deal would be a “whooper” of a bad deal for Apple besides the tax benefit.
Shay empathized that this is not an “Apple basing exercise” and that the larger question was that how could Apple create a tax entity that exists nowhere.
Senator Ron Johnson (R-Wis.) attempted to trip up one of the experts by invoking states as an analogue for countries. But Professor Harvey stood firm, emphasizing that 64% of Apple’s income going to an Irish company that did not contribute significantly to Apple overall Research and Development and Sales. He also emphasized that this issue can be solved. Senator Johnson did not seem prepared and whiffed to an argument that was simply standing up to Apple stockholders.