Taxes: Apple’s profits come back to the U.S.
Apple’s cash is coming home, said Daisuke Wakabayashi and Brian Chen in The New York Times. The tech giant announced last week that it plans to repatriate “the vast majority” of the $252 billion it has hoarded overseas and will make a one-time tax payment of $38 billion. The company also pledged to create 20,000 new U.S. jobs and make $30 billion in U.S. capital expenditures over the next five years, including for a new corporate campus. Apple didn’t explicitly say its decision was the result of Congress slashing the corporate tax rate from 35 percent to 21 percent, but President Trump “seized on the opportunity to take credit,” said Jordan Weissmann in Slate.com. “Great to see Apple follow through as a result of TAX CUTS,” the president tweeted. Apple CEO Tim Cook later said that “large parts” of the plan were thanks to tax cuts and “large parts” would have happened anyway. But Trump has made clear “it behooves any corporation that wants favorable treatment to tie all of their investment decisions to the GOP’s tax bill, no matter how tenuous.”
These are “attention-getting numbers,” but Apple’s move actually comes “at a hefty cost to taxpayers,” said Chris Macke in TheHill.com. Because the GOP tax law allows companies to bring money home at lower tax rates—15.5 percent on cash holdings and 8 percent on nonliquid assets—Apple will save as much as $50 billion in taxes that it would otherwise have owed. Trading that $50 billion in return for 20,000 jobs winds up costing the American taxpayer “more than $2.4 million per job.” Apple “wants to be congratulated” for bringing its money home and for paying what it calls a “record” repatriation tax bill, said Michael Hiltzik in the Los Angeles Times. But it’s a record bill because Apple has been “a world champion at global tax avoidance,” parking profits for years in low-tax Ireland and the tiny island of Jersey. The company “gambled that it could wait out the U.S. government until a tax amnesty came about.” The bet clearly paid off in Apple’s favor.
Give Trump credit where credit is due, said Bret Stephens in The New York Times. The U.S. is about to get a $38 billion tax windfall, thousands of new jobs, and a new Apple campus. That’s “not too shabby, especially considering all the hyperbolic predictions of economic doom that went with Trump’s election.” Don’t miss the long game here, said Kevin Williamson in NationalReview.com. Thanks to corporate tax reform, the U.S. has overnight become a more attractive place to do business. With a lower corporate rate and a move to a territorial tax system, we’re providing the economy with the conditions to help lots of new Apples grow and succeed. Apple’s returning cash is just “the residue—welcome residue!—of deals already done.” It was low-hanging fruit. The smarter question is, after tax reform, “what has been planted?”