New tax law gives Apple impetus for investments
Tech giant to bring overseas cash back to U.S., create second campus
SAN FRANCISCO — Apple is planning to build another corporate campus and hire 20,000 workers during the next five years as part of a $350 billion commitment to the U.S. that will be partially financed by an upcoming windfall from the country’s new tax law.
The pledge announced Wednesday comes less than a month after Congress approved a sweeping overhaul of the U.S. 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 being held overseas.
Apple plans to take advantage of that provision to bring back about $252 billion in offshore cash, generating a tax bill of roughly $38 billion. It’s something that Apple CEO Tim Cook promised the company would do if it could avoid being taxed at the 35 percent rate that had been in effect under the previous tax law.
About $75 billion of the $350 billion in U.S. investments will be paid from money that had been overseas, Apple estimated.
Companies that bring back money stashed overseas this year will be taxed at a 15.5 percent rate, below the new 21 percent rate for U.S. corporate profits
under the new law. As a whole, corporate America has an estimated $2.6 trillion in overseas cash.
Analysts have been predicting that most of the overseas profits coming back to the U.S. would be plowed into paying shareholder dividends and buying back stock, something that happened the last time a one-time break on offshore profits was offered more than a decade ago.
While Apple is likely to return some of its overseas money to its shareholders, Wednesday’s announcement is designed to be a show of faith in the U.S. — the company’s largest market. The public show of support to the U.S. also helps with perceptions of a company that will still continue to make most of its iPhones, iPads and other gadgets in China and other countries that offer cheaper labor.
“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,” Cook said.
Apple, which just spent an estimated $5 billion building a Cupertino, Calif., headquarters that resembles a giant spaceship, plans to announce the location of a second campus devoted to customer support later this year.