Apple could be biggest beneficiary of Republican tax reform plans, saving at least $47 billion

“Apple will see as much as $47 billion slashed from its expected tax liability if Republicans push through their current tax plan, making it the biggest beneficiary of the legislation now working its way through Congress,” Richard Waters and Tom Braithwaite report for Financial Times. “The massive scale of the tax cut, based on calculations by tax experts and the Financial Times, has come into focus in recent days as the Senate and House bills have converged over their treatment of the estimated $1.3tn of cash American companies hold offshore. The details of the tax legislation have yet to be finalised.”

“Like many US companies, Apple has opted to leave the bulk of its overseas earnings abroad rather than pay the 35 per cent corporate tax rate that would apply if the money were brought home under the current regime,” Waters and Braithwaite report. “The Republican proposals call for taxing that money at rates of no more than 14.5 per cent, whether or not it is returned home.”

“Apple has $252bn in foreign cash and investments, about a fifth of the total overseas holdings for all US companies, according to rating agency Moody’s,” Waters and Braithwaite report. “It estimates that it would have to pay $78.6bn in taxes if it brought the money back under the current regime. Under the Senate version of the tax bill, Apple would immediately have to pay an estimated $31.4bn on its past overseas earnings, according to Richard Harvey, a tax professor at Villanova University who has testified before the Senate on Apple’s tax affairs. That number would drop to $29.3bn if the company were to lose its fight with the European Commission over a €13bn claim of back taxes in Ireland.”

“The difference between the two numbers is at least $47bn, a figure that exceeds the annual profits of any other US company,” Waters and Braithwaite report. “Unlike most other US multinationals, Apple has already taken billions of dollars of charges in past years to reflect its potential taxes. It has set aside $36.4bn for those bills — more than the tax charge it is now likely to face — and would likely record the difference as a one-off profit.”

Read more in the full article here.

MacDailyNews Take: Again, we’ll have to wait for the final bill and see the actual rates and details. It would certainly be an excellent development, and long overdue, if the U.S. can modernize/simplify U.S. corporate and personal taxation and come up with a workable solution that benefits the country, U.S. companies and their many millions of employees.

As we’ve been saying for many years now, the U.S. corporate tax rate is obviously way too high and exceedingly anachronistic.

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:
Dow soars 203 points higher to record as Wall Street cheers U.S. Senate passage of major tax bill – December 4, 2017
Oracle joins Apple in support of President Trump’s tax repatriation plan – November 7, 2017
‘Paradise Papers’ leak reveals how the rich use tax havens, from Apple Inc. to Bono to Queen Elizabeth – November 7, 2017
President Trump’s tax plan aims new foreign tax at Apple, other multinationals – October 3, 2017
President Trump’s tax cuts could be YUGE for Apple – September 28, 2017
GOP tax plan calls for cutting the corporate tax rate from 35 percent to 20 percent – September 27, 2017
Goldman Sachs sees $1 trillion in U.S. tax cuts coming – September 20, 2017
Apple will eventually bring billions of dollars back to the U.S. under President Trump’s tax reform plan – July 21, 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

27 Comments

      1. Home Depot co-founder Ken Langone: Democrats are doomed if GOP tax cuts become law

        “I listen to [Senate Democratic leader] Chuck Schumer, and the end of the world is coming with this tax bill,” billionaire businessman Ken Langone said in a “Squawk Box” interview.

        “My guess is it’s the end of the world for the Democratic Party because if this tax bill, in my opinion, passes it’s going to unleash economic forces all to the good for a lot of people,” said the co-founder of Home Depot.

  1. Meanwhile….

    Anyone earning under $75K will have their taxes go up.

    Those who have their college debt waived by working for communities will now have to pay taxes on all that education debt.

    People will no longer be able to deduct their college loan interest when filing your taxes.

    The poor will receive less gov’t help for healthcare.

    The individual mandate under Obamacare will be eliminated.

    This will add an estimated one to $1 – $1.5 trillion to the national debt.

    But don’t worry as all this will take affect in 2019, after the elections.

    1. “Those who have their college debt waived by working for communities will now have to pay taxes on all that education debt.”

      Well, they can pay for student loans like the rest of us, instead of getting handouts. Poor babies.

      1. As a 45 year old going back to college to get an elementary teaching degree, I’ll be making about $20k less per year starting and counted those government programs as part of my income Co compensate for the terrible pay. Teachers start at $30k per year. I could make that flipping burgers. Sorry I decided to leave the corporate world to give back to my community and make a difference in inner city schools. I’m hoping you have a better solution than paying teachers a living salary? $30k means I work 2 jobs as a teacher to pay for food.

    2. You’re worried about debt yet at the same time mad that students have to taxes on free money? Also known as income. I guess if I win the lottery you’d be in favor of me not paying taxes on that?

    3. Funny how both sides swear this is a middle class tax cut… Just like religion, both parties will believe what they believe- truth be dammed. (and by the way, the truth is tax reform pales in comparison to the real problems: interest on the national debt, growing social security & medicare obligations and a shrinking workforce mean we will NEVER be in positive on our cash flow…)

  2. If it wasn’t for Trump Apple may never have been able to bring that money back into the US.

    I wonder where the economy would be if crooked Hillary had been elected.

    Trump certainly wasn’t my first choice but I have to admit that our economy is doing pretty good since the day after the election last year.

    But can liberals bring themselves to see the good that Trump has accomplished?

  3. This is a win-lose situation for me. I have AAPL stock in my retirement portfolio, so I stand to benefit it they pass their savings on to shareholders.

    But I’m also middle-class and retiring in 3 years. From what I’ve read, as the national debt spikes because of this bill, the GOP will use it as an excuse to cut Social Security and Medicare benefits.

  4. In a perfect world, everything is equal and fair and we all could share and hold hands. Sorry, this aint a perfect world. Even if its not fair to all, a corporate tax cut along with repatriation will stimulate this economy and help us all. Top conpanies like Apple will still bear the highest tax burden.

      1. According to a 1996 study by the Cato Institute, on 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years. Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.

        https://object.cato.org/sites/cato.org/files/pubs/pdf/pa261.pdf

  5. We’ve been there. We’ve done that. Why would anyone believe the corporate tax cuts would produce any significant job creation or investment in the U.S.? Corporation’s responsibilities are first to their shareholders. Period.

  6. Nah, Apple’s gonna grab as much cash as possible. Tim Cook et al will be condemning the GOP while shoveling as much cash as they can into Apple’s coffers. It’s so refreshing to see libtards acting out their pecuniary desires.

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