Apple Joins Group Pushing Corporate Tax Holiday

| Apple Stock Watch

Great Big Bags of Cash
Apple has joined a group of other major corporations looking to fund a lobbying effort to get a major tax holiday on the enormous amount of money being earned (and held) in overseas banks.

According to Fortune magazine, Apple, Oracle, Cisco, as well as energy and pharmaceutical firms want to convince lawmakers to give them a one year tax holiday that would allow them to bring some $1 trillion back to the U.S. at a 5% tax rate, instead of the 35% those funds would be subject to today.

Apple has one of the largest cash hoards on the planet, officially at $59.7 billion, but that amount has likely passed the $60 billion mark this quarter. Much of that money is earned outside the U.S., which is the case for many large U.S.-based multinationals.

While outside the U.S., it’s difficult to put that money to work in U.S. R&D and other U.S. capital expenditures, and it’s also harder to pass the money on to shareholders (not that Apple ever passes its profits over to shareholders). Fortune lays out the history of a successful 2004 effort at a similar tax holiday, and how companies are using that experience to make their case.

In 2004 a similar measure passed on the belief that companies would put that money to work in the form os R&R and other investments (as noted above), but a study found that between $0.60 and $0.92 of every dollar of the $362 billion that came back into the U.S., companies went back to shareholders, instead of investments into the companies involved.

Senator Barbara Boxer (D) of California was a sponsor of past tax holiday measures, and many of the firms involved with the new effort are based in her state, including Apple. According to her, the measure being worked on currently puts tighter restrictions on those funds.

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10 Comments Leave Your Own

mhikl

Quote: ” . . . not that Apple ever passes its profits over to shareholders.” Actually it did pay dividends in the 90’s prior to Steve’s return, I believe.

I don’t understand US tax laws but if you pay taxes outside the country, wouldn’t that have any weight on brining it back at a lighter weight?

And 5% sounds selfish but some sort of negotiated rate sounds like a practical discussion. Taxes sound terrible but its what paves roads.

brett_x

So it’s okay to make the money under the certain agreements (aka “laws”), but they are holding it overseas until they get their ransom-  taxed at 1/7 (14.2 %) of the original rate?
This is why tax reform is needed. We can lower that 35% if everyone actually pays the rate. Instead, it seems if you have enough money, you can get the rate lowered. Doesn’t this hurt smaller businesses who can’t afford lobbyists?

Lee Dronick

I wonder if we would be better off with a flat tax rate. No deductions, no credits, just a flat tax. Some people say that it would hurt charities, but maybe not because people give from their heart.

geoduck

I wonder if we would be better off with a flat tax rate. No deductions, no credits, just a flat tax. Some people say that it would hurt charities, but maybe not because people give from their heart.

I’ve thought that for a long time. Not just the flat tax part either. I’ve always thought that there was something slightly smarmy about people giving to charity just to get the tax deduction. We donate to the organizations we donate to but you know we tend to not claim all of it. In some cases it feels like it would cheapen the gift.

So I agree, flat tax for everyone. No deductions, no credit for kids, no credit for houses, nothing like that. Also no “Tax Exempt” status for churches or charities. I figure if you’re non-profit (prophet?) you don’t have anything to tax anyway.

CCardona

flat tax for everyone

OK, I don’t want to get into a political argument, because this is supposed to be about computers, but here it is: a “flat-tax” is the opposite of a “progressive” tax, right? What’s the opposite of “progressive”? Regressive! Is that what you want to identify with?

Maybe we should move this to the Huffington Post? Quick, end of line!

PS-What should SJobs eat at the White House? Let’s argue about that! wink

Lee Dronick

I would think that a flat rate tax would go a long way in ending political corruption, not matter the party affiliation of the office holder. No campaign donations in exchange for a tax break. Not so easy to cook the books with inflated deductions.

An individual or business could also plan for the future. If you are going to be asking for a pay raise or expand your business you can better forecast the tax bill. I could be done with a progressive tax, but I don’t think that a flat rate is progressive.

I do like to keep politics out of my tech and art blogging. Not that I don’t get involved in politics, I very much do, just that I keep that out of my comments here.

Lee Dronick

PS-What should SJobs eat at the White House? Let?s argue about that!

President Obama is visiting Silicon Valley, the tech giants are not going to the White House. That being said I would bet that Steve Jobs is going to be eating some sort of vegetarian meal and the others may very be having the same thing. Where are they meeting? If at Apple headquarters then there is a very nice cafe there, I once there when I was visiting a friend who works at Apple.

geoduck

I would bet that Steve Jobs is going to be eating some sort of vegetarian meal

It is an interesting question as I wonder if his illness has made him change his diet? I’ve been vegetarian for 15 years but I understand their could someday be circumstances (like healing from major surgery or recovering from a dire illness), when I might have to go back to the concentrated, easy to process nutrition in meat.

{And apologies for starting down the politics road.}

Lee Dronick

It is an interesting question as I wonder if his illness has made him change his diet? I?ve been vegetarian for 15 years but I understand their could someday be circumstances (like healing from major surgery or recovering from a dire illness), when I might have to go back to the concentrated, easy to process nutrition in meat.

I am not a full vegetarian. I think that it is vital that we eat some meat, fowl, or fish for health purposes.  By some I mean a little, we try to keep it down to the size of pack of playing cards, for ex-smoker Presidents it is the size of a cigarette pack. Anyway, back to the off-topic. It is a good thing that the Apple naysayers are not attending or they would be eating crow.

Gotta logoff for while, the clock upbraids with the waste of time.

daemon

I’m confused. Is this money not taxable corporate income while outside the United States? Cause if so, someone should have told Wesley Snipes that before he brought his money back into the US from Prague after filming the Blade Trilogy.

On a side note: I don’t trust vegetarians. Anyone that subsists off of a living organism, often without ending it’s misery before consuming it, all in an ethical stance to spare another organism from suffering a similar fate are hypocrites.

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