Morgan Stanley: Apple stands to benefit the most from President Trump’s corporate tax plans

Tiernan Ray reports for Barron’s, “Apple stands to benefit the most from any U.S. tax holiday on overseas cash, writes Morgan Stanley’s Katy Huberty.”

Apple, with $216B of cash held offshore (or 37% of market cap), is the largest beneficiary and would likely pay $54B less in taxes should a repatriation holiday occur and they decide to move all their cash onshore. This would give Apple a significant amount of accessible dry powder to potentially make a sizable acquisition, boost returns to shareholders, pay down debt or do all of the above. It would likely also remove an overhang on the stock that has been in place for many years. Other companies with large offshore cash balances that could potentially step up M&A activity or return cash to shareholders (Exhibit 1)? NTAP (offshore cash is 43% of mkt cap), HPE (26%), HPQ (21%), WDC (17%) and IBM (6%). Collectively, these six companies could save over $61B in taxes, or 25% of their current offshore cash balance, with a 10% repatriation holiday. — Morgan Stanley analyst Katy Huberty

Read more in the full article here.

MacDailyNews Take: The implementation of a new U.S. corporate tax structure for modern times would be far better than a one-time tax holiday.

Again, let’s not do another “one-time-only” (smirk) repatriation holiday. Let’s fix the broken U.S. corporate tax code instead. Let us eschew the easy way out, that fixes nothing in the long run, and choose to do the hard work instead (for a change). — MacDailyNews, September 2, 2016

TGIF! TTK!

67 Comments

      1. Um… that would be because Republicans have the majority. On a whole host of issues that are relevant to federal revenue and spending policies, the Republican majority in Congress has views that are no closer to Mr. Trump than to Mr. Obama. They are overwhelmingly in favor of free markets and minimal government interference with commerce.

        Beyond that, there is the adage that all politics is local politics. No member of Congress is going to vote for anything that could offend the voters and contributors back home. (See footnote).

        This is not Great Britain, where Members of Parliament who fail to vote with the national party on any significant issue can be forced out of office. Members of the U.S. Congress, whatever their party, can vote for anything they think they can sell to their voters back home. They will vote against anything they think will cost them votes back home.

        FOOTNOTE: For example, Mr. Trump was elected largely on the basis of his promises to restore the coal industry in swing states like Pennsylvania, Ohio, West Virginia, and Kentucky. Do you really think that members from oil & gas states are going to vote for tax policies or subsidies to benefit the coal industry, or vice versa? Cheap natural gas is the reason that Coal Country is in decline. Demolishing the EPA will rev up the base, but it isn’t going to help coal because abolishing the existing limits on fracking, pipelines, and exploration on federal lands will make gas even cheaper.

          1. I see nothing illogical about his statement. Will the majority of Republicans eat crow and cooperate with Trump? That is yet to be seen, and that party has shown their lack of maturity, gumption and foresight before when they had control. Just sayin’.

    1. Donald Trump has the greatest plan, greatest plan. It’s a really good plan with all the best things in it. People are really going to like it, trust me. It will make America great again.

      Now to find someone who has that plan to tell it to him.

  1. It starting to feel that Trump got in just so Apple could repatriate it’s profits at a much lower rate. Certainly it would probably have never happened under the Democrats. At least this might have a shot. And then let’s hope Apple does something great with that money once it’s back on U.S. shores.

    1. That statistic is meaningless. As Mr. Trump has pointed out, nobody but an idiot pays the nominal tax rate. Deductions lower everyone’s bill enormously. So, the actual ratio of income taxes paid to bookable income in the U.S. is far below the actual ratio in most other countries. But wait… there’s more:

      The U.S. stands almost alone among industrialized countries in relying so heavily on income taxes. The total U.S. tax burden (federal, state, and local taxes collected as a percentage of GDP) is 26.9%. Among the top 46 industrial countries, the U.S. ranks 44th. The median for countries in the EU is 35.7%. In Denmark, it is over 50%; in Ireland, 30.8%. Those countries derive most of their income from value added taxes and other revenue streams that are not tapped in our country.

      So, in order to reduce our nominal income tax rate to 20%, much less 10%, we could need to (1) eliminate virtually all of the existing deductions, credits, and other incentives so that the actual tax rate approximated the nominal rate, and (2) enact or raise other taxes to make up the shortfall in revenue needed to avoid an explosion in budget deficits.

      Try getting either of those projects through even the most Republican of Congresses. Yes, we will see tax cuts and simplifications over the next four years, but they are not—and cannot—approach the kind of nominal rates you are suggesting.

      As for offsetting the revenue shortfall on the spending side: Remember, Mr. Trump has promised very significant increases in federal spending on defense and infrastructure. Most of the things he has suggested to cut federal spending (Obamacare repeal, etc.) will simply shift the fiscal burden of those programs (e.g. indigent health care) to the states and localities. Same taxes, different tax collector, same impact on the economy.

      1. We will see what is actually passed, but my guess is probably corporate rates will drop, and there will be a tax holiday on the oversees cash. Apparently, most of the other things Trump talked about on the trail was just campaign rhetoric.

        1. The will be no repeal of “Obama Care”

        2. There will be no jailing of Hillary Clinton

        3. Not every single illegal will be deported

        4. Mexico is not going to pay for a wall. A wall might not be built at all

        5. The likelihood of a 45% import tax is small

        https://www.washingtonpost.com/politics/trump-and-aides-hedge-on-major-pledges-including-obamacare-and-the-wall/2016/11/11/9196b364-a82f-11e6-8fc0-7be8f848c492_story.html

            1. This is, of course, categorically false – Chelsea Clinton is NOT married to George Soros, and only simpletons that consider Scott Baio as a legitimate ‘news’ source would blindly believe and repeat this.

              Not that you had any credibility, but with that alone, you’d be in negative credibility territory.

              Is there some way to report blatant trolls like botvinik to moderators?

            2. Thank you for the correction, though it hardly matters…They were married in George Soros’s mansion, her husband’s father, Ed Mevinsky, In March 2001, was indicted and later pleaded guilty to 31 of 69 counts of bank fraud, mail fraud, and wire fraud. Ed Mezvinsky embezzled more than $10 million dollars from people via both a Ponzi scheme and the notorious Nigerian e-mail scams. He was found guilty and sentenced to 80 months in federal prison. After serving less than five years in federal prison, he was released in April 2008 and remains on federal probation. To this day, he still owes $9.4 million in restitution to his victims.

            3. Again, you’re just moving the goalposts. Whatever her father-in-law has done is relatively irrelevant and not salient to your inuendo of Chelsea or her husband’s allegedly improprieties.

              You forgot to mention that Ed Mezvinsky is so much persona non grata that he wasn’t even welcome at his son’s wedding, and it was his mother that gave away the bride.

            4. Furthermore, equally false is your allegation that Chelsea Clinton and Marc Mezvinsky’s wedding was hosted at “George Soros’ mansion.” This is false: the couple was married at the Astor Courts in Rhinebeck, New York, an historic property owned by Kathleen Hammer and Arthur Seelbinder.

              You know these sort of things are a matter of public record – so your lack of fact only further undermines your credibility -not that you have any left.

            5. “to George Soros” – meant to say “to George Soros’ nephew” – thanks Apple keyboard.

              It’s still false. Marc Mezvinsky isn’t related to George Soros.

              George Soros has one brother, Paul Soros, who has two children, Peter and Jeffrey Soros. Therefore, George Soros has two nephews, Peter Soros and Jeffrey Soros, and neither of these people is Marc Mezvinsky.

              Again, this is all a matter of public record, so you making up stuff like this and assuming your audience to be as ignorant as you are, is your primary mistake.

            6. Do you agree that Soros Mutual Funds is the 3rd largest donor to the Clinton campaign? Do you agree that George Soros is financing phony riots @ $15 an hour? Do you agree with post WWII testimony from Jewish survivors that George Soros ratted out his own people to the Gestapo? Do you agree that Soros has been convicted of a felony in France and should be extradited and imprisoned?

              You are as filthy as the Clinton Crime Syndicate itself.

            7. It’s getting to be that nearly everything you throw out as claims, is guaranteed to be false, just by virtue of being associated with you.

              “Do you agree that Soros Mutual Funds is the 3rd largest donor to the Clinton campaign?” – wrong.

              Soros is the 4th largest donor, whose $10.5 million are eclipsed by the $20 million, $15 million, and $12 million of the top 3 donors. Again, public records. You can’t even fact-check your own claims.

              “Do you agree that George Soros is financing phony riots @ $15 an hour?” – well debunked already by multiple sources.

              “Do you agree with post WWII testimony from Jewish survivors that George Soros ratted out his own people to the Gestapo?” – I shouldn’t even have to debunk such obvious pathetic and false inuendo. The only ‘sources’ reporting on this are the usual sort of racist right-wing blogs that don’t get anything right. Just like you.

              “Do you agree that Soros has been convicted of a felony in France and should be extradited and imprisoned?” – the only thing so far where you only got a fraction of it right.

              – He was convicted – of insider trading.
              – There is no request for extradition – it’s a fine of €2.2 million (that funny sign refers to Euros, the European currency – they have other money).

              He said that he would appeal (which he has) and this all dates from back in 2002, 14 years ago – he appealed in 2011, and didn’t manage to overturn the conviction (albeit the penalty was reduced to €940,000), and appealed to the highest court in 2012, which he also lost (the court wouldn’t hear the case), and paid his fine.

              The case is Soros v. France, case number 50425/06, in the European Court of Human Rights.

              “You are as filthy as the Clinton Crime Syndicate itself.” – I would say that only the one repeatedly lying would count as ‘filty’.

            8. Yeah, I guess having exposed you as a serial liar makes me ‘filty’.

              Funny.

              I was about to shut you out anyway — you’re been reported. I suggest for every other participant in these threads to do the same.

            9. On Dec 20, 1998, on 60 Minutes Steve Kroft interviewed George Soros where Soros, a Hungarian Jew, admitted collaborating with the Nazi’s s a teenager and stated: “…I had no sense of guilt.”

              enjoy your monster, filth.

            10. Once again, you are consistent in your inaccuracies and fallacies.

              The Toronto Sun actually retracted and apologized for the right-wing editorial that claimed Soros was a Nazi collaborator. Of course, you wouldn’t know about any of this, since you don’t even know what primary sources are, and you get all your ‘sources’ from YouTube and Breitbart.

              http://mediamatters.org/research/2010/09/20/toronto-sun-corrects-soros-nazi-smear/170877

              “This is what actually happened. Shortly after George went to live with Baumbach, the man was assigned to take inventory on the vast estate of Mor Kornfeld, an extremely wealthy aristocrat of Jewish origin. The Kornfeld family had the wealth, wisdom, and connections to be able to leave some of its belongings behind in exchange for permission to make their way to Lisbon. Baumbach was ordered to go to the Kornfeld estate and inventory the artworks, furnishings, and other property. Rather than leave his “godson” behind in Budapest for three days, he took the boy with him. As Baumbach itemized the material, George walked around the grounds and spent time with Kornfeld’s staff. It was his first visit to such a mansion, and the first time he rode a horse. He collaborated with no one and he paid attention to what he understood to be his primary responsibility: making sure that no one doubted that he was Sandor Kiss.”

              Once again, you make a fool of yourself. Good thing your day job doesn’t require any accuracy from you.

            11. Oh, anonymous and syphilis-plagued botty! I am spending very little time in this politicrap forum, but I have to respond to your continued ridiculous diatribes.

              If you can’t find a biased post to support your claims, then you just make one up! And you call everyone else morons! I am splitting a gut laughing at you!

              Thanks, ZinkD, for calling him on this bit of BS. “Categorically false” should be botty’s handle. I had the thankless job of refuting botty’s BS for years and I am glad that someone else has picked it up.

            12. Somehow, I knew you’d be a fellow defender of George Soros….Soros, in fact, was convicted of felony in France; Soros, by his own admission, was a stoolie for the Gestapo against his own people; Soros, in fact, has been the third-largest donor to the Clinton campaign debacle; Soros’s “Open Society” finances BLM and other subversives responsible for the phony demonstrations presently taking place. Chelsea Clinton, in fact, was married in Soros’s home.

              So you see, Melvin, I was right and you and “Zink” are not only on the wrong side of this argument, you are on the wrong side of history.

            13. Quite welcome – albeit, as we discussed, continuing to refute his nonsense seems a waste of time, seeing as how he just doubles down on the same nonsense, despite having acknowledged the corrections several hours earlier.

              It’s the typical ‘star trek reset button’ that is so common amongst the uneducated.

            14. botninnik is completely reliable, except that Chelsea Clinton isn’t marred to the nephew of George Soros (who isn’t the third-largest contributor, has refuted the collaboration charges, and isn’t a fugitive) and she wasn’t married at his house. Apart from that…

              Besides which, the crimes of a candidate’s family are completely irrelevant to the candidate’s fitness for office. Otherwise, we would have heard much more from the “biased media” during the campaign about the fact that Ivanka Trump’s father-in-law spent time in prison for political corruption.

              Black kettle, meet black pot.

          1. He asked you for sources.
            You refuse to provide them.

            Pretty easy to see that you’re lying – particularly since Hillary Clinton is ahead by 575,000 popular votes as of current counts.
            No idea why you feel you need to lie, since Trump won the only metric that matters, the electoral votes.

            1. “I shall be avoiding all related content regarding Trump- tv, online-!news, papers. Media. I’m gone now. It’s over. Anything but this.”

              gee, you made it a whole day, lyin’ libtard.

            2. Abusive commentator?

              What abuse? Abuse is physical, not metaphorical. A printed word never hurt anyone physically since the beginning of time.

              I suggest you respect free speech, no matter how crass it may be, over the alternative of censorship.

              I enjoy a spirited and passionate discussion. The back and forth is certainly interesting.

              Free speech, baby! 🤗

            3. “Free Speech” (i.e. First Amendment) applies to government interference, not private organizations or individuals.

              re: ‘abuse’ – seems unfortunate that English is not your first language. ‘Abuse’ / ‘abusive’ refers to behavior and is not limited to the physical. The term refers to actions or activity done to bad effect, or for a bad purpose. I suggest simple remedial English classes, or possibly an introductory ESL class.

              Abuse of the commenting system on this site would, for example, be the use of multiple handles, to pretend having supporters.

            4. ZinkD, let a veteran of MDN give you a bit of advice. MDN is not interested at all in moderating this forum, except when it offends their personal sensibilities. They have repeatedly rejected calls to only allow registered participants to post. They profit from political click-bait and regularly post politically-charged material with little or no link to Apple to foment forum conflict. It would not surprise me if botty were an MDN employee or, at least, connected to MDN in some way (even if not actually paid).

              botty posts a lot of crap…too much to waste your time refuting all of it. So just pick the most egregious examples, verbally slap him silly for his nonsense and, then, leave it be. Don’t get tied up in a running post battle because he just sheds his skin and switches topics when he is bested, often resorting to increasingly childish and irrational responses. It just isn’t worth it. There are only a handful of people on this forum who appear to side with botty, and nearly all of them are anonymous idiots, as well. If challenged, they just resort to DoR (denial of reason) attacks.

              For your own sanity, avoid the forum comments. Let botty play with himself and his friends in their fantasy world. In four years you can come back and laugh at them.

            5. Good advice – and yes, I have observed first-hand that MacDailyNews moderators tend to act more when their own fragile sensibilities are affected, than in the interest of their site or community.

              Your assumption that botvinnik is an employee or friend of the owner or the moderators seems credible, albeit unlikely – since they abrogate their responsibilities of moderation towards all abusive commenters.

              Easier, probably, to just completely ignore botvinnik from now on, assuming most intelligent commenters know how base, ignorant and uneducated he is.

              In return, I will keep my adblockers active for this site – if all they care about is clickbait and traffic for their advertising, then it seems reasonable to deprive them of this.

            6. Hey Aussie. You don’t speak for Botty or all Americans.

              You don’t like the video, fine.

              But I feel your pain after the election result did not work out in your favor. On second thought, not.

        1. His ‘source’ is a WordPress site hosted out of Macedonia, 70news.wordpress.com, that engages in clickbait.

          Comes as no surprise, does it?

          This fake news site, which gamed Google searches for a while, has been well exposed and debunked (and no longer show on the top searches). I guess the news hasn’t reached botvinnik’s rock yet.

          https://www.washingtonpost.com/news/the-fix/wp/2016/11/14/googles-top-news-link-for-final-election-results-goes-to-a-fake-news-site-with-false-numbers/

  2. Yeah, we’ll see how much Apple benefits from a lowered repatriation tax. Hopefully it will do Apple shareholders some good. When that happens there’ll be some other problem Wall Street will discover with Apple. First off, Apple’s $80 billion debt needs to be cleared then they can start with what’s left over by acquiring some revenue boosting business. Because Wall Street seems to swoon over those damn cloud businesses, that’s where Apple should at least try to compete with other tech rivals. I’m getting sick of reading articles about Amazon, Alphabet and Microsoft telling how the cloud is wonderfully boosting those companies’ value to some unlimited degree while Apple gets the finger.

    1. Isn’t the maturity on a lot of that debt years out? I’m no financial genius, but wouldn’t they receive a higher rate of return if they purchased a company, increased the dividend, etc. I was always taught it was the CEO’s number one responsibility to increase shareholder value. Has this thinking changed?

  3. Apple has no need to repatriate their offshore cash hoard – if anything, they would bring in enough to pay off the various loans of the past few years, but there would be no advantage to that as they would lose the associated tax deductions they are currently enjoying.

    1. As well as the historically low interest rates at which they borrowed the money. Seriously, if I could borrow money at Apple’s rates, then I would max that out. You can easily make money on the borrowed money at that cost.

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