Apple's US Jobs Announcement Comes At An Opportune Time
- Author: Carolyn Briggs Jan 19, 2018,
Jan 19, 2018, 11:44
The company said Wednesday it will pay $38-billion in taxes on huge cash profits it's been keeping overseas.
A source close to the company confirmed that Apple is sharing some of the wealth with employees worldwide through bonuses of $2,500 worth of restricted shares of stock.
Most of that $250 billion Apple cash pile would have been held by its Irish arm up to 2014, but following a change in the tax law in Budget 2015 - which meant Irish-registered companies could no longer be regarded as "stateless" for tax purposes - the residency of that arm was moved to Jersey. While the headline $38bn figure might sound like a lot (and it is) Apple stands to make a substantial saving on the amount it once would have paid thanks to recent tax cuts introduced by president Donald Trump.
The changes cut the corporate rate from 35 percent to 21 percent.
To avoid the US' high statutory tax rate and its taxation of foreign profits once brought onshore in the US, American companies have used various ways to move as much of their income outside the US as possible. Apple CEO Tim Cook has repeatedly demanded a more "fair tax" for almost two years, which would allow for the repatriation of the company's assets.
The announcement led to a modest bump in Apple's shares, which rose 1.7 percent today.
The company has data centres in seven states.
Roughly half of Americans work at businesses with fewer than 500 employees, and it is not clear how the tax bill will impact these small businesses because the savings outlined in the tax bill are much smaller.
Apple which falls on the list of the top 10 world's largest companies in terms of revenue, has recently announced a series of new initiatives to show its commitment to supporting the USA economy and workforce.
Details on where the new campus will be, are expected to be unveiled later in 2018.
According to the Institute on Taxation and Economic Policy, a research group in Washington, the company has saved $43 billion in taxes through shifting the money under the new terms that is more than any other American company. In an attempt to make them more accessible we've calculated how many of Apple's own creations you'd be able to get for its $38bn repatriation.
Investors have, however, said they'd give the company more flexibility for future buybacks or pay dividends.
Cook told ABC News (via FT): "There are large parts of this that are a result of the tax reform and there's large parts that we would have done in any situation".
It plans to spend more than $US10bn on data centres over five years, as part of a $US30bn capital spending plan for the US.
For comparison purposes, Toyota-Mazda recently announced that they would build a plant in Alabama creating 4,000 jobs in return for $350 million in incentives received from Alabama, equating to a cost of $87,500 per job. Apple typically provides updates on its share buyback program when it announces second quarter earnings.