Why a record $38 billion U.S. tax payment is a good deal for Apple

“Apple has faced mounting criticism in recent years for avoiding taxes in the US and Europe. Wednesday, it offered critics 38 billion replies,” Klint Finley writes for Wired. “More precisely, Apple said it would pay an estimated $38 billion in tax to bring back to the US some of the cash it has stashed overseas over the years. Apple says the payment would be the largest tax payment of its type in history. But it’s also a pretty good deal for the company.”

“Under the new tax plan, Apple and other companies must pay taxes on foreign profits parked overseas. Companies aren’t required to actually move those funds back to the US, but there’s little reason for Apple to keep its cash abroad once it’s paid the tax, says Edward Kleinbard of the University of Southern California Gould School of Law,” Finley writes. “Previously, the US allowed companies to defer paying taxes on foreign profits until those profits were repatriated. So many companies, including Apple, opted to leave foreign profits overseas. As a result, companies accumulated a total of around $2.8 trillion in overseas holdings, research firm Audit Analytics estimates.”

“Had Apple decided to bring all of its overseas cash back to the US last year, it would have paid a tax rate of 35 percent, about $88.3 billion, minus the taxes paid to foreign governments,” Finley writes. “Although Apple is getting off easy with a tax bill of ‘only’ $38 billion, Kleinbard thinks the company’s effective tax rate will be a bit higher in the future…”

Read more in the full article here.

MacDailyNews Take: The importance of the U.S. finally moving to a territorial system cannot be overstated.

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  1. ““Apple has faced mounting criticism in recent years for avoiding taxes in the US and Europe. Wednesday, it offered critics 38 billion replies,””

    Thanks to the GOP massive tax cuts on the rich and corporations. This in turn adds trillions to the debt; which soon the GOP will be looking at cutting SS and MC.

  2. Time for some thoughtful questions about the flow of money.

    So which helps the US debt situation more, money fed into the US economy or money excluded from the US economy?

    Which helps fuel national economic health, money fed into the US economy or money excluded from the US economy?

    All too often we send our money away to other countries. That leads to less wealth here. Apple found a way to get money from people in other countries but our foolish tax policies have strongly discouraged that money from coming back to the US.

    Does it benefit the rich? Absolutely. Does it benefit ordinary people too? Absolutely but to a different degree. The fact is, the rich will always have ways to keep and increase their wealth. Their benefit doesn’t automatically mean that most people then get cheated.

    1. A bit simplistic don’t you think?

      What large companies, including those run by Trump, operate only within the USA? They all launder money through low tax havens and will continue to do so since the USA cannot maintain its infrastructure at the absurd 1.5% income tax rate that tax havens like Ireland offered select companies. Sorry small businesses, you lose. Again.

  3. “Which helps fuel national economic health, money fed into the US economy or money excluded from the US economy?”

    Taxes are income to the state. It uses this money to take care of the business of the state. When that income (taxes) is reduced either by destroying a local economic base by moving jobs overseas or giving unwarranted tax cuts to the rich and corporations, the state looses income. Yet it’s current and future expenditures remains.

    In both these scenarios,the state looses income creating an unstable economy.

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