WASHINGTON (Reuters) – Apple Inc’s chief executive officer defended the company’s tax record at a Tuesday Senate hearing where lawmakers said the maker of iPads, iPods and Mac computers kept billions of dollars in profits in Irish subsidiaries to avoid U.S. taxes.

The hearing marked another foray by the Senate’s most powerful investigative committee into corporate offshore tax avoidance, which is increasingly a target of many governments from the United States to Western Europe.

Senator Carl Levin, who has led several probes into offshore tax issues as chairman of the Permanent Subcommittee on Investigations, said Apple shifted billions of dollars in profits offshore to avoid U.S. taxes on a massive scale.

In 2012 alone, Levin said, Apple avoided paying $9 billion in U.S. taxes.

Apple CEO Tim Cook said at the hearing that his company was a major U.S. taxpayer, handing over nearly $6 billion in cash to the federal government in 2012.

“We expect to pay even more this year,” Cook said in his first congressional testimony since becoming CEO in 2011.

“We pay all the taxes we owe,” he said. “We don’t depend on tax gimmicks. We don’t move intellectual property offshore and use it to sell our products back to the United States to avoid taxes. We don’t stash money on some Caribbean island.”

Cash-strapped governments worldwide are trying to wring more tax revenue from companies whose interests in many countries enable them to shift capital and assets across borders. Critics say the companies exploit tax loopholes. (Video factbox: r.reuters.com/qej38t)

MCCAIN FAULTS TAX SYSTEM

“Closing these kinds of unjustified loopholes could provide hundreds of billions of dollars to reduce the deficit and avert damaging budget cuts,” Levin, a Democrat, said at the hearing.

“We should close them and dedicate the revenue that generates to these important priorities, whether or not we reform the overall tax code,” he said.

Senator John McCain praised Apple as an American business success story, but he said the company’s tax strategy reflected a “flawed” tax system.

“For years, Apple has opted to forego fully contributing to the U.S. Treasury and to American society by shifting profits and circumventing U.S. taxes,” McCain said.

Levin’s panel issued a report saying that Apple used three subsidiaries with no “tax residency” in Ireland, where they are incorporated, or in the United States, where corporate executives manage those companies.

The main subsidiary, a holding company that includes Apple’s retail stores throughout Europe, has not paid any corporate income tax in the last five years, the subcommittee said.

The Levin inquiry comes at a turbulent time in tax circles, with the U.S. Internal Revenue Service under investigation because of the way agents handled conservative political groups’ applications for tax-exempt status.

It is not clear, however, whether that controversy and Levin’s allegations will lead to an overhaul of the U.S. tax code. Tax law writers in Congress had been inching forward on such a project before the IRS scandal erupted earlier this month. Levin’s inquiry has been under way for months.

Subcommittee staffers said on Monday that Apple was not breaking any laws and had cooperated fully with the inquiry.

Shares of Apple were down 0.2 percent at $442.10 in midday trading.

(Writing by Kevin Drawbaugh; Editing by Lisa Von Ahn)

NEW YORK (Reuters) – Stocks were little changed in early trading on Tuesday with Home Depot at a record high and buoying the blue-chips while investors eyed congressional testimony from Fed chairman Ben Bernanke on Wednesday.

The housing market recovery helped Home Depot (HD.N) report higher quarterly sales and earnings, prompting the world’s largest home improvement chain to boost its sales outlook for the year. Its shares rose 2.3 percent to $78.53 after hitting a record of $79.40.

Housing will continue to be a tailwind for stocks and an engine for economic growth in the foreseeable future according to Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

The U.S. economic calendar is thin and the market will continue to be vulnerable with the S&P and Dow industrials near record highs. However, the expectation of continuing accommodative monetary policy from the Federal Reserve should continue to lend support to equities.

“There’s not strong enough evidence one way or another to change monetary policy,” De Gan said, adding that with all the support the Fed has given to equities there are also “fundamental reasons” driving the market.

The Dow Jones industrial average .DJI fell 7.27 points or 0.05 percent, to 15,328.01, the S&P 500 .SPX lost 3.27 points or 0.2 percent, to 1,663.02 and the Nasdaq Composite .IXIC dropped 8.6 points or 0.25 percent, to 3,487.84.

The small- and mid-cap Russell 2000 .RUT continued to face technical resistance at the 1,000 point level but was within two pints of its all time closing high.

Goldman Sachs said in a note to clients dated May 20 that it sees the S&P 500 at 1,750 by the end of the year, a 5 percent advance from Monday’s close, and expects a 12-month rally to 1,825. The bank’s economists forecast above-trend U.S. gross domestic product growth in 2014, for the first time in six years.

Shares of JPMorgan Chase & Co (JPM.N) rose 1 percent to $52.86 as a proposal to strip chief executive Jamie Dimon of his chairman title appeared to be defeated according to a preliminary tally reported by The New York Times.

Apple (AAPL.O) chief executive Tim Cook is expected to testify before Congress later on Tuesday after a U.S. Senate report on the company’s offshore tax structure said the iPhone maker has kept billions of dollars in profits in Irish subsidiaries to pay little or no taxes to any government. Apple shares fell 1.7 percent to $435.44.

Medical device maker Medtronic Inc (MDT.N) reported a better-than-expected quarterly profit driven by strong international sales and its shares rose 6.3 percent to $53.05 after hitting $53.83, its highest since September 2008.

Carnival Corporation & Plc (CCL.N) (CCL.L) slashed its full-year earnings outlook for the second time in less than three months as it expects lower revenue due to the lower ticket pricing it is employing to attract passengers following a string of high-profile mishaps. Its U.S. shares dropped 6.2 percent to $31.13.

Best Buy (BBY.N) shares fell 3.9 percent to $25.77 after the world’s largest consumer electronics chain reported weaker-than-expected quarterly sales and warned that investments to win back shoppers could squeeze profits in the near term.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

WASHINGTON (Reuters) – Two executives at Japan’s Denso Corp (6902.T) have agreed to plead guilty to conspiring to fix prices of electronic auto parts sold to Toyota and will cooperate with an ongoing criminal investigation, the U.S. Justice Department said on Tuesday.

The settlement is the latest in a wide-ranging investigation into price fixing for a variety of car parts that has ensnared nine companies and elicited guilty pleas from 14 executives.

The Denso executives, Yuji Suzuki and Hiroshi Watanabe, both Japanese nationals, will serve time in U.S. prison and pay a criminal fine, the department said. Suzuki agreed to serve a 16-month sentence while Watanabe negotiated 15 months.

Denso itself pleaded guilty in the conspiracy and agreed to pay a $78 million fine last year.

The two men agreed to plead guilty to conspiring to fix the prices of heater control panels that regulate a car’s temperature and were sold to Japan’s Toyota Motor Corp (7203.T) and a U.S. subsidiary, the Justice Department said.

Suzuki also agreed to plead guilty to conspiring to fix the prices of electronic control units, which regulate power windows, power locks and other electrical systems.

In addition to the prison sentence, each man must also pay a fine of $20,000 and cooperate with the ongoing investigation.

The Justice Department’s Antitrust Division has also settled with Autoliv (ALV.N), Tokai Rika Co Ltd (6995.T), TRW Deutschland Holding GmbH, Nippon Seiki Col Ltd, Fujikura Ltd (5803.T), Furukawa Electric Co Ltd (5801.T), Yazaki Corp and G.S. Electech.

The European Commission has a parallel investigation under way.

(Reporting by David Ingram and Diane Bartz; Editing by Gerald E. McCormick and Leslie Gevirtz)

NEW YORK (Reuters) – JPMorgan Chase & Co shareholders voted in support of Chairman and Chief Executive Jamie Dimon maintaining both roles, rejecting a proposal from shareholders who said the corporate governance structure was flawed, according to a preliminary tally at its annual meeting on Tuesday.

Only 32.2 percent of shareholders voted in favor of splitting the chairman and CEO roles, less than the roughly 40 percent who voted to split a year ago.

Shareholders also voted to support the bank’s 11 directors in a range of 53.1 percent for Ellen Futter to 99.4 percent for Timothy Flynn, according to the tally. JPMorgan will release a final tally later Tuesday in an 8-K filing with the U.S. Securities and Exchange Commission.

(Reporting by Lauren Tara LaCapra; Editing by Jeffrey Benkoe)