“Apple, one of our long-term holdings, will no doubt be affected by President-elect Trump’s stance on corporate taxation, immigration and global trade,” Open Square Capital writes for Seeking Alpha. “Let’s focus today on corporate taxation, given that his campaign has already provided some high-level details of what it wants to achieve.”
“While details of the President-elect’s tax policies are still being crafted, we do know that they propose to reduce corporate taxes from 35% to 15%. His proposals also call for a 10% deemed repatriation tax. This is fairly close to House Republican proposals, which include decreasing corporate taxes from 35% to 20% and full taxation of all previously deferred income over a period of time at a high-single digit tax rate,” Open Square Capital writes. “The chance for major tax reform next year is high given the Republican controlled Congress.”
“If the President-elect’s plan were to be enacted we’ll very likely see Apple repatriate a substantial amount of its offshore cash,” Open Square Capital writes. “Flushed with $176.4B of additional US cash, we don’t think Apple will increase its dividend or pay out a one-time dividend; the former would unnecessarily constrain future cash management and the latter is tax inefficient… Consequently, we think Apple will likely fund a large share buyback… We think the company could retain $50B in the US and declare a buyback of $125B… Shortly after the share buyback is announced we believe the share price will trade 20% higher…”
Much more in the full article here.
MacDailyNews Take: Another $125 billion in buybacks would be seismic.
Again, let’s not do another “one-time-only” 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
Morgan Stanley: Apple stands to benefit the most from President Trump’s corporate tax plans – November 11, 2016
Apple and U.S. President-elect Trump: Can a tax cut for overseas cash heal wounds? – November 10, 2016
Apple could be able to pay just 10% tax to repatriate overseas profits under President Trump’s plan – November 9, 2016