Apple to pump $350B into US economy over next 5 years, pay record $38B in repatriation tax...

Posted:
in General Discussion edited January 2018
Looking to boost its domestic image, Apple on Wednesday announced that it expects to contribute $350 billion to the U.S. economy during the next five years, picking up some 20,000 jobs in the process. (Updated with internal letter from Tim Cook.)




"Planned capital expenditures in the US, investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75 billion of Apple's direct contribution," the company said.

For years the company infamously refused to repatriate billions in overseas cash unless it was granted a tax "holiday," but the company is presumably going ahead because of lower corporate tax rates advanced by the Republican Party and U.S. President Donald Trump.

The company expects to pay some $38 billion in taxes on the newly domesticated money, which it says will be the largest payment of its kind ever made.

Some of the 20,000 new jobs will go to a new campus, intially dedicated to AppleCare. The exact size and location of the facility hasn't been revealed, but an announcement is due later in 2018.

The company added that $10 billion of its upcoming capital expenditures will be in data centers, and that today, it's breaking ground on a building in downtown Reno, Nev. that will support existing facilities in the area.

The Advanced Manufacturing Fund, recently used to pump $390 million into VCSEL supplier Finisar, is growing by $1 billion to a total of $5 billion.

Apple is also planning to expand its educational initiatives for teachers, and the ConnectED program, with the aim of boosting coding skills -- and Apple's footprint -- with "students in historically underserved communities."

Update: Apple CEO Tim Cook subsequently issued a letter to employees detailing the upcoming investments. Beyond today's public announcements, Cook said Apple will initiate a charitable giving program for 2018 that matches all employee donations up to $10,000 on a two to one basis.
Team,

This morning we announced a new set of investments Apple will be making over the next several years, including expanding some of our existing campuses and establishing a new one. Were also extending our efforts in support of coding education, ConnectED and STEAM programs. I encourage you to read about these announcements on AppleWeb.

Im excited to let you know that were also increasing our investment in our most important resource our people. You are the heart and soul of Apple and we want you to share in the success made possible through your efforts. Your dedication helps Apple make the best products in the world, surprise and delight our customers, and ultimately make the world a better place.

To show our support for our team and our confidence in Apples future, well be issuing a grant of $2,500 in restricted stock units to all individual contributors and management up to and including Senior Managers worldwide. Both full-time and part-time employees across all aspects of Apples business are eligible. Details are available on AppleWeb.

We also know how much our employees value giving back to the communities where we all work and live. Im happy to announce that starting immediately and running through the end of 2018, Apple will match all employee charitable donations, up to $10,000 annually, at a rate of two to one. In addition, Apple will double the amount we match for each hour you donate your time. Last year, your generosity helped people around the world through causes that are important to you. Im proud that this year well be able to build on that tradition of giving.

Apple's success comes from our people and I am proud to work alongside each of you. On behalf of the Executive Team, thank you for your hard work and dedication.

Tim
ClarityToSeefastasleep
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Comments

  • Reply 1 of 54
    'For years the company infamously refused to repatriate billions in overseas cash unless it was granted a tax "holiday."'

    That would be a good line in a opinion piece.  No so great in a news story.

    Did I "infamously refuse" to pay taxes on the money I contributed to 501k?

    Also, where is the link to the actual announcement in the story? https://www.apple.com/newsroom/2018/01/apple-accelerates-us-investment-and-job-creation/
    edited January 2018 SpamSandwichmuthuk_vanalingambigpicsanantksundaramcornchipbeowulfschmidtStrangeDays
  • Reply 2 of 54
     but the company is presumably going ahead because of lower corporate tax rates advanced by the Republican Party and U.S. President Donald Trump.

     They have no choice under the new tax plan to pay taxes. All US companies holding overseas profits have to pay taxes on that money now. 
    minicoffeecgWerks
  • Reply 3 of 54
    None of this would’ve happened unless the tax plan had been passed. 👍
    racerhomie3muthuk_vanalingamtrumptmansmaffeiClarityToSeetechprod1gylkruppmonstrosityanantksundaramjbdragon
  • Reply 4 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
  • Reply 5 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
    Netflix is definitely not going to happen because the current studio agreement will not survive the sale of the company. But I suspect there will be a series of very large dividends.
  • Reply 6 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
    Netflix is definitely not going to happen because the current studio agreement will not survive the sale of the company. But I suspect there will be a series of very large dividends.
    I hope not.  I don't want a few exceptional dividends from Apple.  If they want to increase dividends for the long-haul, that would be ok, but I like my Apple gains tucked away in deferred capital gains and not dumped into my AGI.
    2old4funcornchip
  • Reply 7 of 54
    flydogflydog Posts: 152member
    Looking to boost its domestic image
    Perhaps there are other reasons?  Where in the press release does it say Apple is "looking to boost its domestic image?"

    anantksundaramcornchip
  • Reply 8 of 54
    I'm curious about the new campus and the comment that it will be dedicated to AppleCare. I understood that a lot of the 6,000 or so employees at their Austin, TX campus were already dedicated to that? I wonder if they will just expand their campus there?
    cornchip
  • Reply 9 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
    Netflix is definitely not going to happen because the current studio agreement will not survive the sale of the company. But I suspect there will be a series of very large dividends.
    I hope not.  I don't want a few exceptional dividends from Apple.  If they want to increase dividends for the long-haul, that would be ok, but I like my Apple gains tucked away in deferred capital gains and not dumped into my AGI.
    Do you reinvest all of your dividends? I have since the beginning of owning my stock. Also, “AGI”?
    edited January 2018 radster360
  • Reply 10 of 54
    Apple urged the previous administration to allow a "tax holiday" so they could repatriate these funds but it was refused.  So this move is unquestionably the result of the recent tax bill.

    http://appleinsider.com/articles/12/03/20/apples_calls_for_repatriation_tax_holiday_gain_no_traction_with_white_house/
    SpamSandwichanantksundaramjbdragon
  • Reply 11 of 54
    'For years the company infamously refused to repatriate billions in overseas cash unless it was granted a tax "holiday."'

    That would be a good line in a opinion piece.  No so great in a news story.

    Did I "infamously refuse" to pay taxes on the money I contributed to 501k?

    Also, where is the link to the actual announcement in the story? https://www.apple.com/newsroom/2018/01/apple-accelerates-us-investment-and-job-creation/
    In agreement with your sentiment. 

    To extend the metaphor, you may have chosen NOT to contribute to a Roth IRA (taxed up front, aka: post-tax contribution) because your tax rate is higher now than you anticipate it being upon retirement. You were smart to go with the taxed-upon-withdrawal (aka: pre-tax) 401k.

    In a similar calculation, Apple knows they need to pay the taxes at some point. You can never avoid the tax man forever. But a smart company (or retirement saver) will choose when to pay taxes to their benefit. 

    Its not unethical, illegal, immoral or anything else. It’s like punting on 4th down or swinging at a pitch when the count is 3 balls and no strikes. It’s just sound strategy within the rules set forward. (sorry about the US sports references)

    That said, I’m glad Apple has found a way to bring some of that war chest home (I’m an American). 
    edited January 2018 cornchipmuthuk_vanalingam
  • Reply 12 of 54
    mike1mike1 Posts: 1,804member
    toddimt said:
     but the company is presumably going ahead because of lower corporate tax rates advanced by the Republican Party and U.S. President Donald Trump.

     They have no choice under the new tax plan to pay taxes. All US companies holding overseas profits have to pay taxes on that money now. 
    Clearly, you don't understand what is happening here. Companies always had to pay taxes on repatriated money. However, the tax rate is now so much lower, that it can begin to make sense for companies to do so. The old rates were so exorbitant, that nobody, not just Apple, brought back overseas profits.
    smaffeiSpamSandwichentropyscornchipfastasleepStrangeDayscgWerksanton zuykov
  • Reply 13 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
    Netflix is definitely not going to happen because the current studio agreement will not survive the sale of the company. But I suspect there will be a series of very large dividends.
    I hope not.  I don't want a few exceptional dividends from Apple.  If they want to increase dividends for the long-haul, that would be ok, but I like my Apple gains tucked away in deferred capital gains and not dumped into my AGI.
    Do you reinvest all of your dividends? I have since the beginning of owning my stock. Also, “AGI”?
    I think he means Adjusted Gross Income.

    My strategy has been to put all my Apple holdings in a Roth IRA. I paid all the tax I ever will as I contributed. Considering Apple is the best performing asset in my portfolio, it was a good choice buying it within the Roth IRA.

    And I most definitely reinvest all my dividends!
    edited January 2018 radster360
  • Reply 14 of 54
    mac_dogmac_dog Posts: 638member
    And the only thing law makers in Washington can see is “$$$” and will do everything in their power to keep it in their pockets. 
    cornchip
  • Reply 15 of 54
    mike1 said:
    toddimt said:
     but the company is presumably going ahead because of lower corporate tax rates advanced by the Republican Party and U.S. President Donald Trump.

     They have no choice under the new tax plan to pay taxes. All US companies holding overseas profits have to pay taxes on that money now. 
    Clearly, you don't understand what is happening here. Companies always had to pay taxes on repatriated money. However, the tax rate is now so much lower, that it can begin to make sense for companies to do so. The old rates were so exorbitant, that nobody, not just Apple, brought back overseas profits.
    That's not the whole story, the new tax regime taxes overseas profits as if they were made in the US.  So in other words, it's cheaper to bring it back, which is exactly what it's intended to do.
    ClarityToSeecgWerksbb-15
  • Reply 16 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
    Netflix is definitely not going to happen because the current studio agreement will not survive the sale of the company. But I suspect there will be a series of very large dividends.
    I hope not.  I don't want a few exceptional dividends from Apple.  If they want to increase dividends for the long-haul, that would be ok, but I like my Apple gains tucked away in deferred capital gains and not dumped into my AGI.
    Building manufacturing facilities to build their product isn't a good use of that money either. Let's not go back to what Steve Jobs did with all those amazing manufacturing facilities that he had build in Fremont, California. Apple is still a technology company and not a manufacturing company. Buying a technology company is much better use of that money.

    I guess you are right about the dividend. I am sure they can structure the special divided so that it is not a capital gains. I am sure someone has already computed the amount of specific dividend if all the money is distributed back to stock holders ;-)
  • Reply 17 of 54
    mike1 said:
    toddimt said:
     but the company is presumably going ahead because of lower corporate tax rates advanced by the Republican Party and U.S. President Donald Trump.

     They have no choice under the new tax plan to pay taxes. All US companies holding overseas profits have to pay taxes on that money now. 
    Clearly, you don't understand what is happening here. Companies always had to pay taxes on repatriated money. However, the tax rate is now so much lower, that it can begin to make sense for companies to do so. The old rates were so exorbitant, that nobody, not just Apple, brought back overseas profits.
    Toddimt knew what they were talking about.

    With the recent tax law changes, U.S. corporations have to pay U.S. income taxes on their as-yet unremitted foreign earnings whether they repatriate those earnings or not. Those earnings are, for income tax purposes, deemed repatriated. That wasn't the case, when it comes to the kinds of earnings at issue, before the recent tax law changes.

    That was, I believe, Toddimt's point.
    edited January 2018 ClarityToSeeretrogusto
  • Reply 18 of 54
    smaffeismaffei Posts: 203member
    That's not the whole story, the new tax regime taxes overseas profits as if they were made in the US.  So in other words, it's cheaper to bring it back, which is exactly what it's intended to do.
    Actually, the new tax bill does impose a substantially higher penalty for huge funds that American companies have parked overseas. Obviously, it's high enough now that the initial 21% hit will be cheaper in the long run. 

    If nothing changed with the corporate tax structure, this would have never happened (especially under a Clinton administration). Whether any good for the people comes from it, that remains to be seen.

    cornchipcgWerks
  • Reply 19 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
    Netflix is definitely not going to happen because the current studio agreement will not survive the sale of the company. But I suspect there will be a series of very large dividends.
    I hope not.  I don't want a few exceptional dividends from Apple.  If they want to increase dividends for the long-haul, that would be ok, but I like my Apple gains tucked away in deferred capital gains and not dumped into my AGI.
    Building manufacturing facilities to build their product isn't a good use of that money either. Let's not go back to what Steve Jobs did with all those amazing manufacturing facilities that he had build in Fremont, California. Apple is still a technology company and not a manufacturing company. Buying a technology company is much better use of that money.

    I guess you are right about the dividend. I am sure they can structure the special divided so that it is not a capital gains. I am sure someone has already computed the amount of specific dividend if all the money is distributed back to stock holders ;-)
    A dividend is difficult to transform into capital gains.  However, paying money to shareholders in a form that delivers capital gains is easy (and exactly what Apple does regularly) - share buybacks.  Even those shareholders who don't participate directly benefit on a tax-advantaged basis to the extent share prices increase. 

    I suspect what will happen is that Apple will pay off some of the debt that was used to finance prior dividends/buybacks, increase dividends a bit, maintain a large buy-back program, and make the capex investments described in the release.
  • Reply 20 of 54
    Let’s hope that part of the repatriated money is returned back to the stock holders as form as special dividend. Creating jobs and stuff is good, but I also hope they use to money to buy technology or additional revenue stream - Maybe really consider picking up Netflix.
    Netflix is definitely not going to happen because the current studio agreement will not survive the sale of the company. But I suspect there will be a series of very large dividends.
    I hope not.  I don't want a few exceptional dividends from Apple.  If they want to increase dividends for the long-haul, that would be ok, but I like my Apple gains tucked away in deferred capital gains and not dumped into my AGI.
    Building manufacturing facilities to build their product isn't a good use of that money either. Let's not go back to what Steve Jobs did with all those amazing manufacturing facilities that he had build in Fremont, California. Apple is still a technology company and not a manufacturing company. Buying a technology company is much better use of that money.

    I guess you are right about the dividend. I am sure they can structure the special divided so that it is not a capital gains. I am sure someone has already computed the amount of specific dividend if all the money is distributed back to stock holders ;-)
    For individual investors, reinvest the dividends. By doing that, you avoid the capital gains tax.
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