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Apple Lobbying for International Tax Amnesty to Bring Home Profits


Over the past few years, much has been made of Apple's reserves of cash and securities, which are now up to approximately $60 billion and growing rapidly. Some observers have suggested the company initiate a stock buyback or issue dividends to reward investors with some of the profits, while others have preferred that the cash remain in Apple's hands to enable the company to reinvest it into the business at some point in the future for greater returns. Apple CEO Steve Jobs noted during the company's October 2010 earnings conference call that Apple is holding onto the cash in order to take advantage of "one or more unique strategic opportunities" that it believes may present itself.

But all of the money may not be available for immediate use, as Fortune reports that Apple is one of a number of U.S. companies with significant profits generated in international markets that continue to sit abroad as the companies prefer to not pay the 35% federal tax charged on such foreign earnings.

To address this situation, Apple and these other major players are reportedly stepping up lobbying efforts to try to get the federal government to offer a one-year "tax holiday" that would allow them to bring the profits back to the United States while only being subjected to 5% tax, with the rationale being that the money could be put to work in the U.S. to stimulate the economy rather than simply sitting in foreign bank accounts.

A group of tech, pharmaceutical and energy giants is readying a major lobbying blitz for a tax holiday that would allow them to bring home the estimated $1 trillion they've got parked overseas at a steeply discounted rate, Fortune has learned.

The campaign is still in its planning stages, but sources close to the effort say Oracle, Cisco, Apple, Duke Energy, and Pfizer are among the major players looking to bankroll a coordinated, sustained pitch to sell policymakers on the idea. Their aim is to win a one-year tax amnesty on their foreign earnings, allowing them to repatriate that money at a tax rate of about 5%, instead of the 35% they face now.

International markets have become increasingly important to Apple as iOS devices have proliferated around the world. In fact, Apple reported that during its most recent quarter, 62% of its revenue came from international sales. Consequently, billions of dollars in profit are being generated overseas each quarter, and Apple has been loathe to turn over 35% of those sums to the U.S. government.

On a possibly related note, Apple recently hired high-profile lobbying firm Fierce, Isakowitz and Blalock to assist with government dealings, an unusual move for the company that has typically refrained from significant lobbying in Washington, DC.

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38 months ago

I can imagine this being fairly contentious. On the one hand - it would be great for the US economy to have that kind of cash injection. On the other - why should the 'rich' pay less tax; while the poor pay more?


Because the wealthy end up carrying the poor through civil development at the end of the day.
Rating: 1 Positives
41 months ago
That is not much of a surprise considering what a tax cheat Steve jobs is.
Rating: 1 Positives
41 months ago

it's already in their pockets. they aren't gaining the money. they already have it, just keep it banked overseas. 30% tax is asking too much to begin with. even if profits would still be huge -30%. Does the gov really deserve that much? imagine investing in a home, hiring contractors to fix it up etc. then when you sell it, the government, who had nothing to do with that home, gets 30% of the money from it just cause. that's obnoxious amount. 5% is more than generous.

lets look at the bigger picture. A company like apple keeps their money overseas, therefor they invest it overseas as well, since they cannot bring money back to US, instead of building a US factory and creating US jobs, they build a factory over there and create jobs for someone elses economy. They do wahtever they can to spend that money on their business THERE. Where if that money were in US, they could spend it here. This has nothing to do with making the rich richer. It's about a company wanting to spend THEIR money on their investments, not give it all to goverment. It would be in best interest of economy for gov to realize that in long run it'd help everyone including themselves. Better economy, less unemployment payouts etc.


Why did they build the server farm in NC then? If you think that an overseas tax rate of 5% would get them to manufacture their products in the US vs. China at 5-10x the cost, you are delusional.
Rating: 1 Positives
41 months ago

A corporation pays 30% income tax, then pay salary to employee with the remaining 70% of money. These employee then pay 40% of tax again, before they could invest in stock. Then if they make money in stock, they pay tax again. If they give the money to their kids, they pay tax again.


Well, first off, a company pays it's taxes AFTER it pays all it's expenses, including salaries, so the 30% comes of the net profit, not the gross income. And most people in America aren't paying 40% in federal income taxes. Since the highest marginal rate is supposed to be 35% on income over $373,000 (for singles) that would be hard to do (and since they only pay Social Security on the first $107k, you just can't reach 40% in federal taxes for an individual - and we're talking MARGINAL rate here, not the real rate which is going to probably be 20%- 25% for most normal people).

If they make money on the stock, they pay tax on the PROFIT, not the gross amount. So again, that isn't double-taxation. If they die and pass the money along to their children MILLIONS of dollars are exempted from taxes, so again, money is missing out of taxation.


It's like when the unemployment was exnteded to 99 weeks, by friend who lost a job for a year told me he doesn't want to look for a retail job cuz the salary will be lower than his unemployment. Even he is very capable of working on many respectful jobs but he chooses not to, he chooese to live off unemployment...why? Because he can. People make decisions based on incentives and when you tax people a lot you remove their incentives to work hard, and when you provide social welfare too much you give them incentive to shirk.


Like the 5-year limit on welfare, the unemployment insurance that goes on forever disinclines a subset of people from looking for work. There is certainl something to be said for having a time limit on it. However, the average unemployment check in the US is $293/week. And that's taxable. That's not to say people don't get larger checks, but it doesn't last forever and $1200/month pre-tax doesn't go too far if you have a family. Not too many people getting ahead on unemployment insurance.
Rating: 1 Positives
41 months ago
Tax them 5% then put the other 30% into a escrow account that HAS to be invested into American jobs, industry, etc.
Rating: 1 Positives
41 months ago

Correct me if I'm wrong, but doesn't the U.S have some of the lowest tax rates among industrialized nations?


Yeah, you're arguing with people who have drunk the corporate kool-aid. For whatever reason, they don't seem to understand that any country on this planet where anyone actually wants to live has a strong social safety net and high taxation. If they think we'd be better off with corporations paying lower taxes they should go hang out with billionaire Russian oligarchs or something. Have fun in the third world, guys! meanwhile, the rest of the world will still be trying to immigrate to places like the US, Canada, western Europe and Scandinavia - you know, places with public schools, parks, seniors' care, social security plans, healthcare, and an actual civil society.
Rating: 1 Positives
41 months ago

But the government isn't getting 35% of 37.2 billion. Right now they aren't getting anything because Apple and other companies are keeping the money overseas. The proposed 5% tax is temporary; I don't want the tax rate to always be at that level for corporations. But I accept that the government getting 5% of 37.2 billion NOW (just from Apple) would benefit the government greatly. Similarly, the money being brought back into the United States would also benefit the citizens and the government. Considering our current economic situation, I support initiatives that help to stimulate our economy now.


With all due respect, now that is batshit crazy.
Small companies, that need to get all the profits they reap back to the US asap pay each year those 35%.
The big ones just sit and wait, and when they have an opp to get government by the balls, they play this 1-year-tax-holiday card.
Let me see how much of a douche you are: Imagine 2011 being the year of the 5% tax holiday.
What happens in 2012, 2013 and onwards?
Will Apple and the others automagically start bringing the profits back at 35%?
If your answer is anything but a resolute "NO!", you´re a complete nutcase. All these big corps will wait another 5 - 10 years and then lobby once again for 5% (or better, even a 2%) tax holiday ...

If the governement had any balls at all, they´d play it this way (no matter if dems or reps):
"Hey corps & peeps, big and small: We´ll redo the tax systems. Now it´s 20% flat on everything, no loopholes whatsoever. - In order to support families, 5k$ income (or pick a number you like better) per capita per year in a household stay completely tax free. - Big Corps, having billions of $$ in foreign bank accounts: bring the money home at 15% within the next three months - those who not comply, we´ll the seize the money at the old 35% rate."

Cheers
i.
Rating: 1 Positives
41 months ago

and let me tell you why the money won't go into rich people's hands. all the VP, SVP, and executives have something called "salary." having the money in US or not will not change their employment agreement or salary level. Money in US will allow US companies to hire more US employees and invest in US capital such as plants, acquisitions, etc.


I'm gonna make a wild, crazy guess and say that AAPL won't be building a single US-based plant.;)
Rating: 1 Positives
41 months ago

I can understand them holding the money in the offshore accounts. And even if they bring it in it stays at the company level it wouldn't go to the execs. And if it did that tax hit would be huge. Imagine as it is now if they bring it over, pay 35% tax. Then they give that to an employee and pay another 38% on that. Thats 60%ish tax right there that goes to taxes.


Of course it won't go to execs, for the most part. If anything, it would mainly benefit large shareholders. But what's your point? It's still cheating.
Rating: 1 Positives
41 months ago

Well, first off, a company pays it's taxes AFTER it pays all it's expenses, including salaries, so the 30% comes of the net profit, not the gross income. And most people in America aren't paying 40% in federal income taxes. Since the highest marginal rate is supposed to be 35% on income over $373,000 (for singles) that would be hard to do (and since they only pay Social Security on the first $107k, you just can't reach 40% in federal taxes for an individual - and we're talking MARGINAL rate here, not the real rate which is going to probably be 20%- 25% for most normal people).

If they make money on the stock, they pay tax on the PROFIT, not the gross amount. So again, that isn't double-taxation. If they die and pass the money along to their children MILLIONS of dollars are exempted from taxes, so again, money is missing out of taxation.




Like the 5-year limit on welfare, the unemployment insurance that goes on forever disinclines a subset of people from looking for work. There is certainl something to be said for having a time limit on it. However, the average unemployment check in the US is $293/week. And that's taxable. That's not to say people don't get larger checks, but it doesn't last forever and $1200/month pre-tax doesn't go too far if you have a family. Not too many people getting ahead on unemployment insurance.



true about the corporate pay tax after salary expense, but still it is double taxation, just smaller.

many people pay 40% all the time, because they live in the majority of US states that have state income tax.

after they pay their income tax, they spend the remaining 60% of their income, and then when they spend they pay 10% of sales tax. do you call that not double taxation?

when i invest, sure i only pay tax on my profit, but why shall i? i already paid tax on the money i invested!

so by the same logic, when i lose $5m in stocks, shall the government give me $5m in tax deduction? after all, if i make money in stock governemnt take money from me, if i lose money they should give me money back then!?

how come the tax deduction for investment loss is only meager 3k a year?

for your unemployment points: people do get ahead, because they still work under-table.

you are only calculating numerical values but not opportunity cost.

if i made $40k before, and w/ unemployment i only make $20k, to you i am losing $20k, but if my free time is worth $30k to me, then i am ahead.
dont forget, unemployment is money paid for working zero hour.

so what do people (like my friend) do? they find work without getting noticed by the goverment. they go on craigslist and join dozen focus groups, clinical trials, small projects, or teach private lesson. heck go even write a book or make iPhone apps. why not? you are getting paid for breathing.
Rating: 1 Positives

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