President Trump mentions Apple's pending US investment in State of the Union address
President Donald Trump gave a tip of the cap to Apple during the State of the Union Address on Tuesday, pointing to the California tech giant's plans to infuse some $350 billion into the U.S. economy over the next five years.
Trump's missive came during a section of the speech dedicated to tax reform, long a major political platform plinth for Republicans.
The GOP recently pushed through a new tax law that effectively lowered rates for larger corporations, a move that resulted in bonuses for some employees. Apple, too, announced a bonus for its worldwide workforce that comes in the form of a $2,500 grant in restricted stock units, which will be meted out to all "contributors and management" up to and including Senior Managers.
Hedged between rallying cries for the American autoworker and promises to lower medication prices, Trump's shoutout to Apple seemingly validated the efficacy of Republican tax reform.
"Apple has just announced it plans to invest $350 billion in America, and hire another 20,000 workers," Trump said.
Apple announced the U.S. investment plan earlier this month, saying it will pump $350 billion into the economy over five years. According to Apple, 20,000 new jobs will be created through strategic investments including a new campus to be built in an as-yet-undisclosed city.
With $75 billion of the investment to be paid for with overseas cash, Apple is expecting to pay out $38 billion in repatriation taxes. That payment will be the largest of its kind, Apple said.
Shortly after Apple announced its investment plans, CEO Tim Cook in an interview with ABC News said the initiative is at least in part thanks to recent changes in U.S. tax policies.
"Let me be clear, there are large parts of this that are a result of the tax reform, and there's large parts of this that we would have done in any situation," Cook said.
The State of the Union isn't the first time Trump ticked Apple's investment as a win for his administration. At a rally earlier this month, Trump said he called Cook to thank the Apple chief personally for what he believes is the largest single investment by any company in America's history.
"When I heard the news yesterday -- and Tim Cook is a great guy, the head of Apple -- when I heard the news, I heard $350 billion and I said, 'You mean $350 million, that is going to be a beautiful plant,' and they said, 'No.' They said, 'It is $350 billion,"' Trump said at the time.
Cook previously attended a State of the Union in 2013 as a guest of President Barack Obama. At the time, Apple had promised to restart Mac manufacturing in America after a years-long hiatus.
Trump's missive came during a section of the speech dedicated to tax reform, long a major political platform plinth for Republicans.
The GOP recently pushed through a new tax law that effectively lowered rates for larger corporations, a move that resulted in bonuses for some employees. Apple, too, announced a bonus for its worldwide workforce that comes in the form of a $2,500 grant in restricted stock units, which will be meted out to all "contributors and management" up to and including Senior Managers.
Hedged between rallying cries for the American autoworker and promises to lower medication prices, Trump's shoutout to Apple seemingly validated the efficacy of Republican tax reform.
"Apple has just announced it plans to invest $350 billion in America, and hire another 20,000 workers," Trump said.
Apple announced the U.S. investment plan earlier this month, saying it will pump $350 billion into the economy over five years. According to Apple, 20,000 new jobs will be created through strategic investments including a new campus to be built in an as-yet-undisclosed city.
With $75 billion of the investment to be paid for with overseas cash, Apple is expecting to pay out $38 billion in repatriation taxes. That payment will be the largest of its kind, Apple said.
Shortly after Apple announced its investment plans, CEO Tim Cook in an interview with ABC News said the initiative is at least in part thanks to recent changes in U.S. tax policies.
"Let me be clear, there are large parts of this that are a result of the tax reform, and there's large parts of this that we would have done in any situation," Cook said.
The State of the Union isn't the first time Trump ticked Apple's investment as a win for his administration. At a rally earlier this month, Trump said he called Cook to thank the Apple chief personally for what he believes is the largest single investment by any company in America's history.
"When I heard the news yesterday -- and Tim Cook is a great guy, the head of Apple -- when I heard the news, I heard $350 billion and I said, 'You mean $350 million, that is going to be a beautiful plant,' and they said, 'No.' They said, 'It is $350 billion,"' Trump said at the time.
Cook previously attended a State of the Union in 2013 as a guest of President Barack Obama. At the time, Apple had promised to restart Mac manufacturing in America after a years-long hiatus.
Comments
Where are the ACTUAL jobs? From what I've read Apple will now spend HALF of what it did last year on taxes, which is already a joke.
I love Apple products but give me a break.
You can’t really spin this, oh wait, no, you totally can... by mistake I tried to view you as a reasonable person, attributing to you the traits you evidently do not possess.. Please, forgive me for being so naive.
I don't live in the US, so no affiliation to either political party. But this tax plan puts an awful lot of hope and stock in the fact that these kind of investments will counter the fact that it makes the deficit skyrocket even further. Risky politics at least, some would argue that it just short-term politics (I'm inclined to think the latter as well, also considering the other actions of this administration).
On-topic: it fits Trump to take full credit for this, and any other president would probably done at least partly the same. Of course, another president would have done this in a more subtle manner, but hey, subtility isn't Trump's middle name (and I think everyone knows that by now...
The bill contains a section on a tax holiday for repatriating cash - that part has occurred on several occasions previously in the last 40 years.
We won’t really be able to tell the longer term impact of the rest of the bill on overseas cash holdings by companies - it’s possible that more will simply choose to HQ overseas and become foreign companies with an American subsidiary for example.
It’s entirely possible the 1.4 trillion gap between the bill’s revenue and government expenditure will simply accelerate the decline of America as a global power.
On the other hand , the outcomes from the tax bill might be net positive long term - it’s just too early to tell. However the recent announcements of repatriation of current large offshore holdings is NOT caused by the bill as a whole, just one part of it.
One way to get a guesstimate of that would be to plot Apple’s annual $ invested and new hires in the US over the last 5 years, fit a regression line, and project that regression line into the future. How do these new investments compare to the regression line? That is, how do the new investments compare to our best estimate of what Apple would have done anyway?
Another angle is to approach it from the buyback/dividend/debt side. That’s a lot easier because it all shows up pretty clearly in financial reports.
Eventually I suspect somebody will do this and then we’ll have a better sense of what the real effects of the tax law change on Apple’s behavior are.
Apple said their investment would “create” 20,000 jobs. They didn’t provide a breakout, but I imagine many of those jobs will be in the support community — app developers, construction workers for new facilities, etc. All good — I’m not belittling these —but many will not be “Apple hires.”
-- The rich will get richer
-- Corporations get to increase their stock buy backs & dividends with our money
-- Paul Ryan will get to justify gutting Medicare and Social Security using our additional $1.5T deficit.
-- Private industry will get to buy up national infrastructure now that we can't afford to maintain it.
-- The middle class gets to feel good about the pennies that DaffyDon threw to them...
And regarding the money coming back to the US: what do you think Apple invested its overseas money in? A lot of it in US bonds and the like. Hence, the money has already been invested in the US. There won't be a real gain in money. The only one who wins is Trump. And Apple helped him. After 2017 was filled with bad news, 2018 kicked of with this bad news from Apple.
This is bad for Apples image and reputation.
Every President takes credit. Obama took credit for everything too, perhaps even more. He practically spiked the football when we killed OBL and injected himself into practically everything.
But as to the fiscal situation: Tax cuts do not cause deficits. Deficits are a function of expenditures vs. revenue. It's almost impossible to predict the deficit impact of any spending bill or tax bill, because it's only half the equation. We do know that tax cuts result in a short-term revenue decline, one that is often temporary once the stimulative effect of the cut (depending on its nature and size) kicks in. Ronald Reagan reduced taxes massively (lowering the top rate from 70% to 28%) and yet revenue doubled during his presidency because of economic growth. However, spending was not controlled, so deficits persisted.
I'm not sure what you mean by "investments." That's often how politicians refer to spending. The other think they do is conflate spending with tax cuts themselves. We often hear about "spending money on a tax cut" or "the rich get most of the tax cut." The problem with that is 1) It's not the government's money, it's ours and 2) People keeping more of their own money is not the same as the government spending it.
When it comes to the other $310 billion or so, we can't say that none of it is attributable to the recent tax law changes, but we can say with some confidence that the vast majority of it isn't. That is, we can say that unless we think that Apple would have otherwise significantly slowed its pace of spending in the United States. I've broken out the numbers elsewhere, and compared them to what reported numbers we have from the past, so I won't do that again here (unless someone would like me to, of course).
And to be clear... Apple's as-yet unremitted foreign earnings aren't needed for the $350 billion in U.S. spending which it referred to (except, perhaps, for the new U.S. taxes which it will be paying). Apple will, of course, likely repatriate the majority of those as-yet unremitted foreign earnings because there wouldn't seem to be a good enough reason for it not to. It has to pay the new taxes on them whether it repatriates them or not. But the U.S. spending it referred to has, and at the levels Apple referred to can continue to, come out of operating cash flows. Most of it is counted in cost of revenues and the rest is counted in OpEX.