As Apple nears $200B in cash, U.S. Senators once again propose a repatriation tax break

Posted:
in General Discussion edited February 2015
U.S. Senators Barbara Boxer and Rand Paul on Thursday announced the "Invest in Transportation Act of 2015," a proposal that would allow companies such as Apple to bring foreign cash reserves back to the U.S. at a significantly lower tax rate while using the proceeds to replenish the Highway Trust Fund.




The bill, which has yet to be introduced, would lower the tax rate for repatriated foreign earnings from 35 percent to 6.5 percent. Companies would be given up to five years to complete the move, and only transfers that exceed the company's annual average repatriation would be eligible for the reduced rate.

In addition to boosting federal infrastructure spending, the bill would contain provisions designed to force companies bringing cash back to use that money for hiring, increasing wages or pensions, improving environmental standards, public-private partnerships, capital improvements, or acquisitions. None of the funds would be eligible for use in executive compensation, shareholder dividends, or stock buybacks for three years after the repatriation scheme ends.

"The bipartisan repatriation proposal is a win-win for our economy and our country," Sen. Boxer told The Hill. "First, it will bring back hundreds of billions of dollars in foreign earnings that are sitting offshore, which can be invested here in America to create jobs. Second, the taxes paid on those earnings will be used to extend the Highway Trust Fund, which supports millions of jobs nationwide. I hope this proposal will jumpstart negotiations on addressing the shortfall in the Highway Trust Fund, which is already creating uncertainty that is bad for businesses, bad for workers and bad for the economy."

Apple finished its first fiscal quarter of 2015 with $179 billion in cash, an increase of $24 billion from the previous quarter. Though the company did not break down how much of that money is currently held overseas, its foreign cash reserves reached nearly $140 billion as of last summer.

Already one of the largest taxpayers in America, Apple has lobbied hard for corporate tax reform in recent years, with repatriation taxes a central tenet of that push. The company has urged lawmakers to look at proposals that lower the cost of capital returns while being revenue neutral, eliminating corporate tax expenditures, and lowering corporate income taxes overall.

This is not the first time such a tax break has been proposed in order to benefit infrastructure spending. A similar program was debated last June, but was not successful.
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Comments

  • Reply 1 of 205
    nasseraenasserae Posts: 3,153member
    6.5% is better than zero since these companies will never bring that money back at the current rate.
  • Reply 2 of 205
    dasanman69dasanman69 Posts: 12,979member
    They're learning that some dollars beats no dollars, yet I learned that in kindergarten.
  • Reply 3 of 205
    MacProMacPro Posts: 18,167member
    Sounds like a plan to me. If it is bi-partisan maybe it stands a chance. It would nice to see something achieved by Congress.
  • Reply 4 of 205

    Eh, what the heck. Then Apple can afford to give shareholders jackets or something.

     

     

    I've decided that shareholder jackets are to me what the Apple TV set is to Gene Munster.
  • Reply 5 of 205
    Originally Posted by digitalclips View Post

    It would nice to see something achieved by Congress.

     

    Achievement ? passing laws.

     

    And why a break? Why not just lower the tax rate and stop them from bleeding out of the country?

  • Reply 6 of 205
    Quote:

    Originally Posted by Tallest Skil View Post

     

     

    Achievement ? passing laws.

     

    And why a break? Why not just lower the tax rate and stop them from bleeding out of the country?




    Cause the king has a pen and a phone and doesn't like that idea. <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

  • Reply 7 of 205
    Good idea but this part sucks:

    "None of the funds would be eligible for use in executive compensation, shareholder dividends, or stock buybacks for three years after the repatriation scheme ends."

    Most shareholder dividends would be taxed a second time at minmum 15%. Why not allow that?
    Most executive compensation lands in America and is also taxed a second time, usually averaging more then 15% as well. Only stock buybacks escape secondary taxation. That is the only thing they should be worried about.
  • Reply 8 of 205
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    Eh, what the heck. Then Apple can afford to give shareholders jackets or something.

     

     

    I've decided that shareholder jackets are to me what the Apple TV set is to Gene Munster.




    Great post !

  • Reply 9 of 205
    LMAO...I'll give you this nickel because it's BIGGER than that DIME...LMAO
  • Reply 10 of 205
    dasanman69dasanman69 Posts: 12,979member
    beltsbear wrote: »
    Good idea but this part sucks:

    "None of the funds would be eligible for use in executive compensation, shareholder dividends, or stock buybacks for three years after the repatriation scheme ends."

    Most shareholder dividends would be taxed a second time at minmum 15%. Why not allow that?
    Most executive compensation lands in America and is also taxed a second time, usually averaging more then 15% as well. Only stock buybacks escape secondary taxation. That is the only thing they should be worried about.

    Did you think it was going to be unconditional?
  • Reply 11 of 205

    Go Rand Paul!

  • Reply 12 of 205
    Quote:

    Originally Posted by BeltsBear View Post



    Good idea but this part sucks:



    "None of the funds would be eligible for use in executive compensation, shareholder dividends, or stock buybacks for three years after the repatriation scheme ends."



    Most shareholder dividends would be taxed a second time at minmum 15%. Why not allow that?

    Most executive compensation lands in America and is also taxed a second time, usually averaging more then 15% as well. Only stock buybacks escape secondary taxation. That is the only thing they should be worried about.

     

    The way I read it, they could use the money for dividends, exec compensation, etc after a three year moratorium. So bring it home cheap, invest in hiring, and capital expenditures, green initiatives, public/private etc. Then let the rest sit for three years and return more capital to shareholders at that point. So Apple could have a massive amount of short term capital to play with and more of the money earned in the US could go to shareholders _if_ they can get this passed congress and the president. Sounds like a win win, but that is exactly why it may not pass. Some folks just don't like a good compromise.

  • Reply 13 of 205

     

     

    This is the most recent JOT. Accurate.

  • Reply 14 of 205
    Originally Posted by TheWhiteFalcon View Post

    This is the most recent JOT. Accurate.


     

    PETA will be levying a new lawsuit against Apple soon for driving a species to extinction.

     

    It’ll be dismissed, of course, as Apple having enough money to choke every horse does not mean that they choke actual horses therewith.

  • Reply 15 of 205
    chasmchasm Posts: 1,421member
    "They're learning that some dollars beats no dollars, yet I learned that in kindergarten."

    Your kindergarten was pretty stupid. You're saying it's okay if I pay you half what you're earning now and give it to the CEO instead, but let you keep working there. Hey, some dollars are better than no dollars, right?
  • Reply 16 of 205
    dasanman69dasanman69 Posts: 12,979member
    chasm wrote: »
    "They're learning that some dollars beats no dollars, yet I learned that in kindergarten."

    Your kindergarten was pretty stupid. You're saying it's okay if I pay you half what you're earning now and give it to the CEO instead, but let you keep working there. Hey, some dollars are better than no dollars, right?

    I also learned what humor was, but it looks like you were absent for that lesson.
  • Reply 17 of 205
    Quote:
    Originally Posted by chasm View Post



    "They're learning that some dollars beats no dollars, yet I learned that in kindergarten."



    Your kindergarten was pretty stupid. You're saying it's okay if I pay you half what you're earning now and give it to the CEO instead, but let you keep working there. Hey, some dollars are better than no dollars, right?



    Any analogy can be taken beyond its meaning by foolish people.

  • Reply 18 of 205
    mpantonempantone Posts: 1,375member
    Quote:
    Originally Posted by BeltsBear View Post



    Good idea but this part sucks:



    "None of the funds would be eligible for use in executive compensation, shareholder dividends, or stock buybacks for three years after the repatriation scheme ends."



    Most shareholder dividends would be taxed a second time at minmum 15%. Why not allow that?

    Most executive compensation lands in America and is also taxed a second time, usually averaging more then 15% as well. Only stock buybacks escape secondary taxation. That is the only thing they should be worried about.



    My guess is that the language is there for the less sharp congressmen (in order to get the legislation passed) and a certain percentage of the electorate (perhaps some of the more dim-witted ones).

     

    Let's say you have a dollar in your wallet from local sales, and three dollars in your piggy bank from overseas sales. Let's say a chocolate bar costs 25 cents, the same as a pencil. They're basically saying that if you break into your piggy bank, you can't buy candy bars with that money, but you can buy American-made pencils. 

     

    That way, congressmen can go back to the voters and proclaim, "Those are corporate dollars we put to work for you, the taxpayer. We have brought new business to the American pencil maker. Please donate to my campaign generously."

     

    So you say, great, I'll just use the dollar in my wallet to buy candy bars, and the other three dollars to buy other things, like American-made pencils. That's something the congressmen don't need to explain to their constituents.

  • Reply 19 of 205
    melgrossmelgross Posts: 31,507member
    Go Rand Paul!

    Yeah, let him go to another country and stay there.
  • Reply 20 of 205
    melgrossmelgross Posts: 31,507member
    This is a terrible plan. I can't see many companies go for this.
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