Neither one of those companies files an income tax with the United States.

It is not right, to leave that decision, it seems to me, the way it is decided so unilaterally, that a company can shift its value to a place---to a tax haven, which is what Ireland is.

Somehow or other you have to figure out, if there were an arm's-length deal here, what would be shifted.

We have to change this system. But in order to change it, we have to understand it, not deny it.

I do not consider deferral to be a sham or abuse in any kind of way.

And if Apple can create companies with no tax residence and create profits in those companies, and if that is going to be tolerated, couldn't all U.S. multinationals in effect do the same thing--eliminate the corporate tax for our…

If a shell entity is incorporated in a foreign tax jurisdiction, can it be disregarded for U.S. tax purposes?

Apple Inc. keeps those intellectual--those economic rights, right?

I think the obligation of the Treasury Department here is to ensure that laws that are passed are implemented in the way that Congress intended them through regulatory activity; and, second, where there are problems that arise, to propose…

I about fell off my chair when I read that because, when I think about tax gimmicks, certainly some of the techniques that Apple uses could, in general usage of the word, be considered 'gimmicks.'

Where are we? How can we possibly be in a situation today where the law permits income to be allocated to a company resident nowhere and not be taxed anywhere?

And the pricing, when you look at the facts and circumstances, is it also the value of what is transferred?

You have a right to do that just the way you had a right not to shift that intellectual property for Mexico, Canada, and South America.

So I think one question for Members of the Committee and ultimately Members of Congress to consider is whether it makes sense for a company like Apple to be able to enter into an agreement that transfers its crown jewels to a foreign…

You are going to pay--Apple Inc. is going to pay the taxes on the income for all the parts of the world except for where two-thirds of the profits are created.

I would say that what we really need to do is apologize to Apple, compliment them for the job creation they are doing, and get about doing our job.

You would agree it is correct.

The question is whether we should continue to tolerate this state of affairs, which is doing tremendous harm to our Nation's fiscal health.

But there is no income--there is no tax paid on the money itself that has been sent to Apple.

This is the first time that we have ever come across entities that have no tax residence.

You at the IRS and the Treasury Department can change the allocation if you find it necessary to prevent--excuse me. I will put it positively. If you find it necessary to clearly reflect the income of such organization, trade, or…

Do we have or do you have an obligation to stop multinational corporations from shifting income to tax haven jurisdictions?

Is the purpose of your regulation that they meet arm's-length standards?

This Subcommittee is about investigating a Tax Code that is not working for the American people, is not working for businesses in this country.

What is the impact on U.S. tax revenue if U.S. multinationals can enter into cost-sharing agreements with offshore companies that they control and then direct most of the profits to those offshore companies?