Apple to pump $350B into US economy over next 5 years, pay record $38B in repatriation tax...
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.
"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
Comments
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/
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.
http://appleinsider.com/articles/12/03/20/apples_calls_for_repatriation_tax_holiday_gain_no_traction_with_white_house/
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).
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!
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 ;-)
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.
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.