BUSINESS

Whole Foods CEO On Using Tax Havens: 'We Would If We Could'

07/01/2013 01:05 pm ET | Updated Jul 02, 2013
AP

Whole Foods isn’t really in a position to avoid taxes, but the company would if it could, according to its CEO.

The grocery store chain doesn’t “have a way... to shelter [its] money,” Whole Foods’ co-CEO John Mackey told the Financial Times. “But frankly, we would if we could.”

In the article about corporate tax policy, Mackey defended Apple’s tax strategy, which has allowed the tech giant to legally avoid paying huge amounts in taxes on billions in profits, according to a May Senate report. Apple CEO Tim Cook fought back against the criticism, telling lawmakers "we pay all the the taxes we owe."

"I would say you have an ethical obligation to pay the taxes that you owe but you don’t have an ethical obligation to pay taxes that you don’t owe," Mackey added. "In fact you should be seeking ways to legally minimise your taxes."

Mackey, a libertarian, is not the first to note that Apple is simply taking advantage of loopholes Congress has failed to close. During a Senate hearing on Apple’s tax avoidance in May, Sen. Rand Paul (R-Ky.) accused Congress of bullying Apple over its tax strategy, saying the company was just upholding its responsibility to shareholders by making as much money as possible.

Currently, the U.S. tax code allows American-based multinational companies to defer U.S. taxes on income earned abroad until they bring those profits back home. The companies still technically have to pay taxes on the profits to the country in which the money is housed, but by stashing the cash in havens they can pay taxes on it at a super-low rate.

Tech corporations like Apple are able to take advantage of this policy because they make some money abroad and because much of the companies' profits are generated through intellectual property, which is easier to move around for tax purposes.

Retail companies like Whole Foods on the other hand, which make most of their money through physical stores in the U.S., can’t shift their income around as easily, meaning they could pay the top corporate tax rate of 35 percent.

It may not come as a surprise that Mackey is interested in paying taxes at a lower rate. Whole Foods was one of many companies to sign on to a letter from the Retail Industry Leaders Association earlier this year asking Congress to lower the top corporate tax rate and to move toward a territorial tax system, which would allow corporations to pay almost nothing in U.S. taxes on the income they earn abroad.

This also isn't the first time Mackey has laid his controversial opinions bare. Earlier this year, he compared President Obama’s health care reform law to fascism, a statement he later apologized for.

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