GOP eyes taking bigger bite from Apple, others holding cash overseas to seal President Trump’s tax cuts

“Republican tax negotiators, aiming to finalize their nearly $1.5 trillion in tax cuts on Friday, are planning another raid on the overseas piggy banks of Apple, Microsoft and Google-parent Alphabet,” Jed Graham reports for Investor’s Business Daily. “Already, the Senate version of the bill would impose a 14.5% tax on cash held overseas by those tech titans and other companies to avoid being taxed at the current 35% corporate rate, along with a 7.5% tax on illiquid assets such as real estate, raising $298 billion.”

“Now there’s talk of bumping up those rates to 15% on cash and 8% on illiquid assets, up from the 10% and 5% tax rates initially targeted, and there’s a chance it could go higher still,” Graham reports. “Apple has $252 billion parked overseas, while Microsoft holds $128 billion and Alphabet $52 billion.”

“No major hurdles appear to stand in the way of passage, but Republicans need to free up extra cash after changes that have made the bill more expensive than the Senate version, on which the final bill is largely based. The changes include a 21% corporate tax rate, instead of 20%, but a start date of 2018, not 2019. The GOP deal also allows individuals to deduct $10,000 in state and local taxes of any kind, not just property taxes, as in the original version, to mollify California Republicans.,” Graham reports. “In addition to the corporate tax cut, the vast majority of businesses whose profits are taxed via individual tax returns also get tax cuts.”

Read more in the full article here.

MacDailyNews Take: It’ll be interesting to see how the final bill shakes out, but we’d bet large multinationals would take a bit of a hit on repatriation in exchange for finally moving to a territorial system.

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

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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
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Analyst: Apple could double dividend, buy Netflix with repatriated cash under President Trump’s U.S. corporate tax changes – March 17, 2017
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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
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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


    1. “man, I loathe RINO’s more than libtards.” sez Dean Clark.

      “man I am so bitter and immature that all i do is paste inflammatory labels on everyone.” Fixed that for you.

      For years old Deano has proven he has no friends and despises everyone, except maybe Putin and oligarchs who wrap themselves in either american or russian flags.

      What did you expect your corrupt gop to do in the dark of night while they attempt to ram through a poorly designed tax break? if the orange sphincter actually wanted to incentivize domestic hiring and a renewal of american factory investment, he would have called for a slashing of payroll taxes. This tax bill is all about a corrupt party picking winners and losers, and botfuck acts surprised.

  1. Doesn’t impact Apple much.. they’ve already been setting aside foreign profits at a 35% tax rate so anything beneath that in the final bill is pure profit and will flow straight to the bottom line.

    Very few other US large/mega caps have been doing this, and unlike Apple will take an immediate and large hit against their cash holdings which will be very detrimental to their financials.

    Apple, sensibly, assumed the worst, put the money aside, and anything better than 35% will be pure cream for shareholders.

    1. Great point. I remember Apple talking about that several years ago at one of the earning calls. I could be wrong but I have a feeling that the tax reserve is not included in the cash on hand so could add a significant increase in revenue when the change is implemented.

    2. Note, though, that this tax on overseas assets will be due even if the assets are not repatriated. There is even a 7-8% tax on assets that CAN’T be repatriated, like real estate. How would you respond if China assessed a tax on the US assets of every company doing business in China? Reciprocity could bite.

  2. Republicans have long yelled about the 35% corporate tax rate, but always to fail to tell us that the average tax rate ACTUALLY PAID is under 20%. Then there are the various cash hand outs to business, like the 10 year 40 BILLION cash hand to the energy sector that ends in a year or so.

    Don’t cry about business taxes – they have plenty of lobbyists to take better care of them than we do.

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