Thursday, January 18, 2018

Apple Scruffs

Our story this morning is not about the George Harrison song, which paid tribute to the folks who used to hang around Savile Row and Abbey Road in the late days of Beatlemania. We're talking about a totally different Apple Nothing scruffy about this news:
Apple Inc. said it would pay a one-time tax of $38 billion on its overseas cash holdings and ramp up spending in the U.S., as it seeks to emphasize its contributions to the American economy after years of taking criticism for outsourcing manufacturing to China.

The world’s most valuable publicly traded company laid out its plans Wednesday in a statement that was full of big-dollar figures, though it said that much of the money reflected Apple’s current pace of spending.

Apple said it would invest $30 billion in capital spending in the U.S. over five years that would create more than 20,000 jobs. The total includes a new campus, which initially will house technical support for customers, and $10 billion toward data centers across the country. It also will expand from $1 billion to $5 billion a fund it established last year for investing in advanced manufacturing in the U.S.
Would that have happened if the tax reform package that Trump championed had been killed? We don't know for sure, but it's a reasonable surmise. More from the Wall Street Journal:
Apple’s $38 billion tax commitment is the largest such sum announced in response to the major overhaul of the U.S. tax code that President Donald Trump signed into law late last year. That law included an incentive for U.S. companies to bring home offshore holdings, with companies required to pay a one-time tax of 15.5% on overseas profits held in cash and other liquid assets.
15.5% is far less than the 34% or 35% that the government would ostensibly had collected under Obama, but it's far more than nothing, which is what the government actually received when Apple and other companies kept their money overseas. There's more:
U.S. companies have long pushed for such a change to enable them to repatriate overseas cash without what they considered an excessive tax hit. Apple on Wednesday cited the tax changes as the reason for its $38 billion payment. It didn’t say how much of its $252.3 billion in overseas cash holdings it plans to bring home, though it will be the vast majority, Chief Executive Tim Cook told ABC News in an interview.

All told, Apple said it would directly contribute $350 billion to the U.S. economy over the next five years, with the bulk—about $55 billion this year, for example—coming from ongoing spending on parts and services from U.S. suppliers. That number also includes the federal tax payment and capital spending.
Back in the late 1960s, the Apple Scruffs hung out at the gates, always hopeful of getting the attention and favor of the Fab Four:

Can we get some?
We've now lifted the gates and money is coming in, from Apple and a variety of other companies. You'll see more stories of this sort in the coming weeks and months.


Bike Bubba said...

This is Yuge and wonderful. I must admit I had my doubts about the size of the corporate tax cut, but this is $38 billion up front and then tens of billions more in other taxes paid as Apple does hiring.

Now if only Congress and Drumpf can work together to get rid of some of the idiot spending our country does....

W.B. Picklesworth said...

It's becoming more and more clear that electing Trump was a big win for America. This will no doubt cause Lefties to turn out in droves in November to try to ruin it all. (I take it as a given that they aren't emotionally capable of understanding or even examining reality.) The question will be, how motivated are Republicans and Independents to keep sensible governance going?

R.A. Crankbait said...

Won't happen BB; this just means more money staying here for the Congress to spend.

This does show that successful companies - regardless of their political philosophies or posturing - can read a bottom line. It's like all of those Hollywood types that say paying taxes are noble, and then film their movies in states that cut them fat tax breaks.