Apple brings $38 billion back home, thanks to tax plan

Evan Castillo, Contributing Writer

Apple announced Jan. 17 that it will make a one-time tax payment of $38 billion in cash that the company has been holding overseas. Additionally, Apple pledged to emphasize its contributions to the American economy, which includes creating 20,000 jobs and investing $30 billion in United States facilities over the next five years.

Apple’s $38 billion pledge is a response to President Donald Trump’s newly signed tax bill. Included in the tax plan is a 15.5 percent one-time tax on overseas profits that companies hold in cash and other liquid assets. The new tax plan states that companies can no longer avoid taxes by holding cash overseas, as overseas profits will now be taxed regardless of whether the money is brought back to the United States or not.

With the $30 billion in facilities investments, Apple will create a new U.S. campus which will house technical support for services including Siri and iMessage and will reserve $10 billion towards creating new data centers in-country.

Apple, which has the largest cash reserve out of all the S&P 500 companies, did not say how much of its $252.3 billion in overseas cash it plans to bring back to the United States. Apple is taking advantage of Trump’s one-time tax exemption to bring overseas profits back, otherwise the tax rate would be 35 percent.

Apple’s promised investments in the U.S. economy accentuate the positive aspects that the new tax bill has on corporations. Although 20,000 jobs and $30 billion is a large influx into the U.S. economy on Apple’s behalf, most of the money brought back from overseas investments is believed to be used in share buybacks and stock dividend payments to shareholders.   

At roughly $176 a share, Apple’s current stock attracts a certain class of investors and increasing dividends will certainly not impact everyone in the American economy. However, Apple can do whatever it wants with its profits and it is not the company’s responsibility to promote the U.S. economy. Apple’s responsibility lies within making sure the company is profitable and sustaining and to maintain its shareholders’ best interests.

Apple has received a lot of criticism from the current administration for parking profits overseas and avoiding U.S. taxes. Trump has criticized Apple for not manufacturing in the United States, however, it should be noted that Apple claims it has created 1.6 million jobs in the U.S. from its so-called app economy.

Apple is using Trump’s tax plan in a positive way and showing how the plan can be beneficial to companies. Although the plan may increase net taxes for many individuals, it is certainly a positive thing for American corporations. Corporations will no longer park large amounts of their profits overseas, but instead now bring money back and keep it in the United States to be invested back into the economy where ideally it will positively impact the American people.

(Visited 146 times, 1 visits today)