Dear Visitor,

Our system has found that you are using an ad-blocking browser add-on.

We just wanted to let you know that our site content is, of course, available to you absolutely free of charge.

Our ads are the only way we have to be able to bring you the latest high-quality content, which is written by professional journalists, with the help of editors, graphic designers, and our site production and I.T. staff, as well as many other talented people who work around the clock for this site.

So, we ask you to add this site to your Ad Blocker’s "white list" or to simply disable your Ad Blocker while visiting this site.

Continue on this site freely
You are here: Home / Government / Trump Tax Cuts May Be Big for Apple
Trump Tax Cuts Could Be Big for Apple and Other Tech Companies
Trump Tax Cuts Could Be Big for Apple and Other Tech Companies
By Levi Sumagaysay Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
For Apple and other Silicon Valley tech companies, tax cuts being proposed by President Trump and the Republicans could be huge. 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, according to Moody's annual investor report, which was released in July. As they seek 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.

During his presidential campaign last year, Donald Trump promised a one-time repatriation rate of 10 percent, but that figure wasn't contained in the nine-page proposal his administration released Wednesday.

What 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."

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 would not comment on Cook's comments at the time -- his interview came after the company was ordered to pay back taxes to Ireland. The company is appealing that European Commission decision.

Apple has long advocated for lower taxes on profit made outside its home country, especially because its size and success make it a popular target for critics of American companies that keep most of their money overseas. 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.

What would that tax reform bring, though?

In 2004, after a tax holiday under President George W. Bush, U.S. companies that repatriated overseas profit did not produce the national economic benefits as expected. A report by the Congressional Research Service, Congress' nonpartisan think tank, said the hundreds of companies that took advantage of the drastic tax cut -- 5.25 percent -- used the money they brought back to enrich shareholders: They didn't create jobs. They cut them.

"Of course the aim of companies is to benefit the shareholder," said Fred Foldvery, a lecturer in economics at San Jose State University, in a phone interview Wednesday. But he said the permanent tax reductions being proposed are "a step in the right direction" that could provide long-term benefits to the U.S. economy.

Overall, Foldvery said more details are needed about the tax plan, which he said is "probably not revenue-neutral" and would increase the deficit.

Other tech giants with lots of money stashed overseas include Microsoft, which according to the Moody's report had 95 percent of its $131.2 billion cash hoard abroad at the end of 2016; Alphabet (60 percent of $86.3 billion); Cisco (87 percent of $71.8 billion); and Oracle (88 percent of $52.8 billion).

© 2017 San Jose Mercury News under contract with NewsEdge/Acquire Media. All rights reserved.

Image credit: iStock.

Tell Us What You Think


Like Us on FacebookFollow Us on Twitter

China-based Vivo will be the first company to come out with a smartphone featuring an in-display sensor for fingerprint security, beating Apple, Samsung, and other device makers to the punch.

© Copyright 2017 NewsFactor Network. All rights reserved. Member of Accuserve Ad Network.