Apple banks on tax break to build 2nd campus, hire 20,000

SAN FRANCISCO — Apple is planning to build a new corporate campus and hire 20,000 US workers in an expansion driven in part by a tax cut that will enable the iPhone maker to bring an estimated $245 billion back to its home country.

The pledge announced Wednesday comes less than a month after Congress approved a sweeping overhaul of the US tax code championed by President Donald Trump that will increase corporate profits.

Besides dramatically lowering the standard corporate tax rate, the reforms offer a one-time break on cash held overseas.

Apple plans to take advantage of that provision to bring back most of its roughly $252 billion in offshore cash, generating a tax bill of about $38 billion. That anticipated tax bill implies Apple intends to bring back about $245 billion of its overseas cash, based on the temporary tax rate of 15.5 percent on foreign profits.

Apple has earmarked about $75 billion of the money currently overseas to finance $350 billion in spending during the next five years. The spree will include the new campus, new data centers and other investments.

But most of the $350 billion reflects money that Apple planned to spend with its suppliers and manufacturers in the US anyway, even if corporate taxes had remained at the old 35 percent rate.

Analysts have also predicted that most of those overseas profits will flow into stock buybacks and dividend payments. That’s what happened the last time a one-time break on offshore profits was offered more than a decade ago.

The new law lowers the corporate tax rate to 21 percent on U.S. profits while providing a sharper discount on overseas cash this year.

Apple CEO Tim Cook is now delivering on a longtime promise to bring back most of the company’s overseas cash if the taxes on the money were slashed.

After plowing nearly $46 billion into dividends and stock repurchases in its last fiscal year, Apple is likely to funnel a big chunk of overseas money to its shareholders. But Wednesday’s announcement was clearly designed to be a sign of its allegiance to the US, Apple’s most lucrative market.

The company didn’t say how big the second campus will be, or how many of the additional 20,000 workers that it plans to hire will be based there. About 84,000 of Apple’s 123,000 workers currently are in the U.S. (AP)