“Apple has fat stacks of cash stashed overseas, but that hasn’t stopped the company from borrowing billions to give money back to shareholders,” Ethan Baron reports for The Mercury News. “Why borrow when sitting on $240 billion in cash?”
“‘One five-letter word: taxes,’ said Steven Rosenthal, a senior fellow at the Brookings Institution’s Tax Policy Center,” Baron reports. “Apple has $240 billion in cash held overseas, out of total cash reserves of $256.8 billion, according to Securities and Exchange Commission filings.”
“So far in 2017, the Cupertino tech giant has issued unsecured notes three times: on May 5 for $7 billion; on Feb. 15 for $1 billion; and on Feb. 3 for $10 billion, according to company filings with the SEC, for a total of $18 billion,” Baron reports. “That borrowing followed $23.9 billion in unsecured debt raised last year.”
“Bringing the money home would put Apple on the hook for a U.S. federal tax rate of 35 percent,” Baron reports. “Apple’s borrowing this year carries interest rates of 1.6 to 4.3 percent, a fraction of the cost of repatriating hoarded funds.”
Read more in the full article here.
MacDailyNews Take: Obviously, the U.S. needs tax reform yesterday.
We’ll see where it all ends up (the corporate tax rate won’t end up being 15% as proposed by President Trump, but it may end up being 20-25%, which is certainly better than the stifling 35% it is now).
As we’ve been saying for many years now, the U.S. corporate tax rate is way too high. Obviously.
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
SEE ALSO:
Apple’s unequaled $250 billion cash pile draws calls for buybacks, acquisitions as President Trump’s tax revamp looms – May 1, 2017
President Trump’s tax reform plan includes deep cuts in corporate taxes – April 26, 2017
Apple could be primed for profit explosion under President Trump’s big tax cut – April 26, 2017
Analyst: Apple could double dividend, buy Netflix with repatriated cash under President Trump’s U.S. corporate tax changes – March 17, 2017
Apple raises $10 billion in debt ahead of President Trump’s repatriation tax plans – February 3, 2017
After Apple’s blowout earnings, the Street looks toward ‘iPhone X’ and President Trump’s tax reforms – February 3, 2017
President-elect Trump’s corporate tax reform expected to have some positive impact on Apple EPS – January 14, 2017
Exploring Apple’s tax situation under U.S. President Donald Trump – November 21, 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
Donald Trump plan calls for cuts in corporate taxes, personal income tax rates – August 9, 2016
Barring a tax holiday, Apple will need to raise over $50 billion in debt the next 2 years – July 15, 2016
Cramer: Apple’s Tim Cook is ‘patriotic’ on taxes – December 21, 2015
Apple CEO Tim Cook is absolutely right – and wrong – on U.S. corporate tax policy – December 20, 2015
Apple CEO calls corporate tax rap ‘total political crap’ – December 18, 2015
Apple avoids $59.2 billion U.S. tax bill – October 7, 2015
U.S. companies now have $2.1 trillion overseas to avoid corporate taxes – March 4, 2015