Apple to pay $38 billion under tax law, hire 20,000
Company plans major investments at home
LOS ANGELES – Apple, which has come under criticism for building many of its products in China, announced a sweeping set of moves partially tied to the congressional passage of a tax overhaul, including paying $38 billion in taxes from profit made overseas and opening a second corporate campus.
The iPhone maker said it will make $30 billion in capital expenditures in the USA over the next five years, in part from opening data centers to feed growing demand for services such as iCloud. It will create more than 20,000 jobs at existing Apple campuses and a new one, initially for technical support, at an unnamed location, probably setting off a scramble among states and cities vying for bragging rights.
The company is the latest to an- nounce new payouts tied to the tax bill, a landmark win for President Trump and the Republican-led Congress, which said the lower corporate rate should lead to faster job growth, higher corporate profits and steeper wages as companies take some of those tax savings and invest them. Critics warned that companies might instead funnel their savings into buybacks and dividend increases, sidestepping workers.
Apple will give $2,500 stock bonuses
to most of its 125,000 employees worldwide.
The company shoulders a big tax bill as it brings back much of its estimated $252 billion cash from overseas, quieting another long-standing complaint from lawmakers: that the world’s most valuable company avoids paying some U.S. taxes because it keeps so much of its profit outside the USA. Apple said the $38 billion payment would probably be the largest of its kind.
“Apple is a success story that could only have happened in America, and we are proud to build on our long history of support for the U.S. economy,” said Tim Cook, Apple’s CEO.
Cook had long said Apple would bring back some of its profit if the U.S. lowered the corporate tax rate. The company will realize a savings of $42 billion from the tax law, said analyst and investor Gene Munster from Loup Ventures, as it takes advantage of a one-year window that lowers the tax rate on repatriated profit to 15.5%. That’s less than the 21% tax rate on corporate profit from the new law, itself a drop from the 35% prior rate.
In a news release, Apple didn’t mention moving production of iPhones to the USA. They are designed at Apple’s headquarters in Cupertino, Calif., but built at Foxconn plants in China.
Critics asked why Apple couldn’t produce iPhones here, and Cook responded that it’s not just a matter of paying foreign workers less. Training is a major factor. Chinese factories excel at keeping production lines running for a company that produces more than 200 million iPhones yearly, Cook told CBS’ 60 Minutes in 2015.
Apple will focus its capital expansion on data centers — spending $10 billion on adding more like the one it broke ground on in Reno on Thursday — and the new Apple campus. Apple employs 84,000 people in all 50 states.
Including the new investments and Apple’s pace of spending with U.S. suppliers and manufacturers, which it expects to total $55 billion this year, Apple said its contribution to the U.S. economy will be more than $350 billion over the next five years.
Jobs at data centers and technical support may not match the high-paid software and business jobs that created wealthy hubs in Seattle, San Francisco, Los Angeles and New York. Data centers typically operate with minimal staff. According to Glassdoor.com, the average yearly salary for tech support pros is a little more than $36,000.