Carl Icahn’s political campaign could boost value of his Apple holdings

“The plan of Carl Icahn to spend $150 million in campaign money touches on the hottest debate in corporate taxation — and it’s also one that could make the financier plenty of money as well,” Steve Goldstein reports for MarketWatch.

“Icahn announced his intentions in a letter on his web site, saying he wanted to fight the ‘pernicious’ efforts by companies to merge with foreign companies to switch their tax domicile. That tactic, called an inversion, has led the country to lose over 50 companies, or at least their headquarters,” Goldstein reports. “‘If this exodus is allowed to accelerate, there will be disastrous consequences for our already fragile economy, as well as meaningful and unnecessary job losses,’ Icahn says.”

“Icahn’s preferred method of tackling inversions is corporate tax reform. He says that inversions can be fought with a one-time repatriation tax of 5% to 10%, which would encourage companies to bring the $2.2 trillion they have deposited abroad back to the U.S. Icahn said he would pair this with infrastructure spending on highways, a plan similar to one proposed by Rep. Paul Ryan, the Wisconsin Republican who leads the House Ways and Means Committee,” Goldstein reports. “Funnily enough, Icahn happens to own a big stake in one company that would benefit greatly from such a move — Apple, which has over $200 billion in cash outside U.S. shores.”

Read more in the full article here.

MacDailyNews Take: Regardless of whether Icahn would benefit or not, U.S. corporate taxes are obviously too high and desperately require reform.

Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.Apple CEO Tim Cook, May 21, 2013

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  1. “U.S. corporate taxes are obviously too high”

    Really? If the average US citizen could get away with paying so little (percentage wise), they would be ecstatic. The median income in the US is lower than in Canada and also many other countries in the world. The US poor are even more disadvantaged BUT the very very wealthy are even more wealthy than ever and keeping it for themselves. There is very little ‘trickle down’ economics that helps the middle class in the US. All you have to do is look up the stats yourself.

    1. You do realize, don’t you, that the profits that a company makes, known by the technical term of “dividends”, is passed on to its owners, known by the technical term of “stockholders.” Now, the corporation has already paid taxes on this money, but thanks to our idiotic tax system, the recipients of this money then get to pay income tax on their dividends. So, actually, a corporate tax rate of 0% would be an appropriate response, given that the people who get all the money still have to pay taxes on it again.

      1. That is profoundly disingenuous. Not all publicly traded companies pay dividends to shareholders. And literally none pay all of their profits as dividends. In most cases, dividend payouts are a rather small percentage of their profits. The rest of the profits they often just keep (like Apple, amassing over $200B of it).

        Shareholders profit from ownership mostly on speculation that the value of shares will increase over time.

    2. How many times do we have to repeat, corporate taxes are a myth!!! In the end, it is the individual that pays – either through a lower paycheck from the taxed company or though higher retail prices. Come on guys. Wake up already!

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