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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.
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.