“For Apple and other Silicon Valley tech companies, tax cuts proposed by President Donald Trump and the Republicans could be huge,” Levi Sumagaysay reports for The Mercury News. “The framework that will act as a jumping-off point for Congress to revamp the U.S. tax code includes a proposal to cut corporate taxes to 20 percent from the current 35 percent, and language about making changes to ‘[stop] corporations from shipping jobs and capital overseas’ and reducing taxes on foreign profits.”
“Apple alone holds $231 billion overseas, or 94 percent of the $246 billion cash hoard the company had as of the end of 2016,” Sumagaysay reports. “As they sought to avoid repatriation taxes, the total amount of cash held overseas by U.S. companies climbed to $1.3 trillion at the end of 2016, up from $1.2 trillion in 2015, Moody’s said.”
“The proposal says: ‘The framework transforms our existing ‘offshoring’ model to an American model.’ It says it will do that by ‘taxing at a reduced rate and on a global basis the foreign profits of U.S. multinational corporations,'” Sumagaysay reports. “Apple CEO Tim Cook made quite a statement of his own last year about his company’s cash hoard. He said during an interview with RTE radio in Ireland that the company had ‘provisioned several billion’ for the purpose of repatriating profit to the United States this year.”
“Apple has long advocated for lower taxes on profit made outside its home country,” Sumagaysay reports. “In 2013, Cook and other Apple executives were called to testify before Congress about the company’s tax avoidance. Cook said, ‘Apple pays all the taxes we owe,’ and called for tax reform.”
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MacDailyNews Take: As proposed, this would be the most sweeping U.S. tax reform since President Reagan.
The most significant piece for big corporations would be the switch from a worldwide tax system to a territorial tax system for multinationals which would also include a repatriation tax holiday at yet-to-be-determined rates allowing U.S. companies to finally bring offshore profits back home.
As we’ve been saying for many years now, the U.S. corporate tax rate is obviously way too high.
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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