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.
So Apple and the others who kept their money abroad (at least on paper) have now successfully lobbied themselves into the same tax bracket as people earning roughly 9k to 38k per year.
AppleCare is one of the unsung heroes that keeps Apple's customer loyalty at levels that other companies can only dream about. If putting them in new digs will improve their already stellar efficiency and effectiveness it will be money well spent. Bravo to Apple for investing even more into the US economy while continuing to spur global economic development and generally lifting the tide for millions of direct and indirect employees, partners, suppliers, developers, and everyone who contributes to and benefits from the rich Apple ecosystem.
So Apple and the others who kept their money abroad (at least on paper) have now successfully lobbied themselves into the same tax bracket as people earning roughly 9k to 38k per year.
Are corporations people? Should they be taxed like people? I'm not sure the comparison holds water.
The progressive tax system for individuals is based on the idea that there is a certain amount of money needed to sustain a family, as income increases, taxes can go up because the cost of doing family (business) doesn't have to increase. As income decreases, more money can be left in the pockets of the family to sustain a reasonable lifestyle.
The flat corporate tax is based on the idea that a business likely has to scale up costs as its cash flow increases.
Obviously this is a huge oversimplification and it is quite reasonable to argue that we don't strike the right balance in many ways.
The models are so different, I'm not sure comparing rates from one to the other is particularly useful.
They "pay", nearly nothing... I like Apple but come on, this kind of article never turns right (surprised they even opened it up to comment) and this is the only comment I'm going to make in this thread.
Not to get too political but it looks like trumps tax plan is working as planned.
Politics aside we really need to see how this plays out long term once all the bills come rolling in and we have to pay the tab. The market is all about differential gains, e.g., quarter-to-quarter, year-over-year, etc., so nearly everyone is going to see great FY17 to FY18 differential gains. The tax law changes are a one-time re-baselining and a substantial percentage of the gains will be folded back into companies through stock repurchases. Then FY19 happens. Then we're back to year-over-year comparisons on the same measurement scale. Companies will still have to show improving year-over-year results to keep the feel-good market going. I absolutely hope the economy keeps improving and the benefits of its improvement touch a much larger proportion of the people who directly contribute to its success in a meaningful way. I also hope that something is done to improve the aging and decrepit infrastructure that exists in so many places.
From what's implied in this article Apple at least seems to be proceeding in a responsible and smart manner and cleaning up some of the current nagging concerns and investing in infrastructure and human capital for a longer term business expansion.
...once all the bills come rolling in and we have to pay the tab.
The best thing about fiat currency is that you can just call it all worthless and annul your debt simultaneously. It’s not like it actually has any real worth now, after all. 2025 is going to be a fun year.
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?
Maybe they will build a second space ship.
Cook should really put it into Siri. Alexa is so far ahead that she's lapping Siri. (Renee Ritchie had a good Vector podcast about this Last week with Brian Roemmele)
might as as well put it in Seattle and hire people from Cortana and Alexa. It's sad how Cook had ignored this and fallen behind.
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?
Maybe they will build a second space ship.
Cook should really put it into Siri. Alexa is so far ahead that she's lapping Siri. (Renee Ritchie had a good Vector podcast about this Last week with Brian Roemmele)
might as as well put it in Seattle and hire people from Cortana and Alexa. It's sad how Cook had ignored this and fallen behind.
It's time to buy IBM and put Watson to work. Get rid of Siri once and for all.
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.
Not right. Tax on qualified dividend is due the year you receive the dividend, regardless if you reinvest the money to buy more stocks. So long as you held the stock for 60 days, you are taxed the long term capital gain rate of 15% or 20%.
So by reinvesting your dividend, you are only saving the cost of the commission of buying the stock. Plus a lot of stock brokers will not purchase shares below a certain amount or fraction of a share. Of course if your dividend don't even amount to the price of a share, then reinvesting it is the best thing to do.
Since you are taxed on the dividend the year you received it, a better way to invest is to take the money (after taxes) and place it in a Roth IRA and then purchase the stock there. Otherwise, you are going to have to pay the taxes on the dividend with income from other sources. (But some stocks will allow you to reinvest only a portion of the dividend and allowing you to have money to pay the taxes on it.) Plus it is much easier to figure out the capital gains tax when you sell those shares, as there will no tax. (providing you're 59 1/2 and retired)
They "pay", nearly nothing... I like Apple but come on, this kind of article never turns right (surprised they even opened it up to comment) and this is the only comment I'm going to make in this thread.
Apple already paid the foreign tax on this money. So unless I'm wrong, the 15% they're going to pay is on top of the foreign tax. Which is probably on the average, about 10%. There is no tax credit for foreign tax paid. So 25% tax is hardly nothing.
So if you think about it, even if Apple had repatriate the money before this new tax bill, Apple would have been allowed to deduct the foreign tax paid from the taxes owe. So with a 35% tax rate and deducting 10% in foreign taxes paid, Apple would had only paid about 25% anyways. A saving of 10% is no big deal, even though for Apple, it amount to lots and lots and lots of money.
Now, if Apple were allowed to deduct the foreign taxes they paid on this money, from the 15%, then I agree with you that ....." they "pay", nearly nothing.....".
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.
Wait a minute! If you've held the stock more than a year, dividends are deemed to be 'qualified dividends' and they're taxed at the capital gains rate. Am I wrong? Has Turbotax turned me into an unwitting tax cheat all these years?
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?
Maybe they will build a second space ship.
Cook should really put it into Siri. Alexa is so far ahead that she's lapping Siri. (Renee Ritchie had a good Vector podcast about this Last week with Brian Roemmele)
might as as well put it in Seattle and hire people from Cortana and Alexa. It's sad how Cook had ignored this and fallen behind.
It's time to buy IBM and put Watson to work. Get rid of Siri once and for all.
This is a great suggestion. Keep the Watson and IBM’s cloud initiatives (iCloud sucks too), build on them, divest the rest.
IBM is transforming itself pretty rapidly. The stock may get very pricey very soon.
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.
Wait a minute! If you've held the stock more than a year, dividends are deemed to be 'qualified dividends' and they're taxed at the capital gains rate. Am I wrong? Has Turbotax turned me into an unwitting tax cheat all these years?
For "qualified dividend", one only needs to hold on to the stock for 60 days, in a combination of days before and after the dividend pay out date.
In other words, if one buys the stock 10 days before the dividend payout, one must hold on to the stock for at least another 50 days after the payout. Then the dividend is deemed "qualified", even if one no longer own the stock at the end of the year. If one owned the stock for 60 days or more before the dividend payout, then one can sell the stock right after receiving the dividend and the dividend is deemed "qualified".
But if one buys the stock 10 days before the dividend payout and sell the stock 10 days after the payout, the dividend is not deemed "qualified" and taxed as regular income. Even if one were to later buy back the shares by the end of the year.
They "pay", nearly nothing... I like Apple but come on, this kind of article never turns right (surprised they even opened it up to comment) and this is the only comment I'm going to make in this thread.
Apple already paid the foreign tax on this money. So unless I'm wrong
Yes you were wrong. Apple has long held 10's of billions as un-taxed revenues and adding to that amount each and every quarter, which is why they are now claiming they'll pony up $38B in taxes based on a 15% corporate tax rate rather than the previous standard 35%, In practice the rate has nearly always been a much smaller percentage anyway. Does any company actually pay 35% of their profits in corporate taxes? Except for the most clueless I seriously doubt it.
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.
And almost no company paid those official rates so the crocodile tears that American corporate income tax rates are too high for large companies is a sham. In fact, a percentage of Fortune 500 companies pay no federal income tax at all. According to a 2016 analysis by the GAO, in 2012, 19.5% of companies with at least $10 million in assets paid no income tax that year. Overall, including businesses that didn't report a profit, 2/3rds of all larger companies in the U.S. paid no federal income tax between 2006 and 2012.
A March 2016 report claims that 27 profitable companies in the S&P500, including Level 3 Communications, United Continental and GM paid no federal income tax in 2015 in spite of reporting pre-tax profits.
In about 1953, corporate income taxes were about 6% of GDP (although lower before and after). In 2020, they'll be about 2.2%. This is one of the reasons we don't have the money for infrastructure. Although I think that projection was made before the current tax bill was passed. If the current tax bill results in more companies actually paying taxes, albeit at lower rates, perhaps it will be beneficial. But I doubt that will be the case. But I will give Apple some credit because they do seem to be using that money to hire more people and expand their operations. Many other CEO's already told Mnuchin that the reduction in taxes would not result in more hiring.
And meanwhile, the tax bill seems to really screw small companies, who now lose a lot of deductions unless they are pass-through businesses.
Comments
Winning.
https://www.investopedia.com/ask/answers/011215/if-i-reinvest-my-dividends-are-they-still-taxable.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186
The progressive tax system for individuals is based on the idea that there is a certain amount of money needed to sustain a family, as income increases, taxes can go up because the cost of doing family (business) doesn't have to increase. As income decreases, more money can be left in the pockets of the family to sustain a reasonable lifestyle.
The flat corporate tax is based on the idea that a business likely has to scale up costs as its cash flow increases.
Obviously this is a huge oversimplification and it is quite reasonable to argue that we don't strike the right balance in many ways.
The models are so different, I'm not sure comparing rates from one to the other is particularly useful.
From what's implied in this article Apple at least seems to be proceeding in a responsible and smart manner and cleaning up some of the current nagging concerns and investing in infrastructure and human capital for a longer term business expansion.
Cook should really put it into Siri. Alexa is so far ahead that she's lapping Siri.
(Renee Ritchie had a good Vector podcast about this Last week with Brian Roemmele)
might as as well put it in Seattle and hire people from Cortana and Alexa. It's sad how Cook had ignored this and fallen behind.
So by reinvesting your dividend, you are only saving the cost of the commission of buying the stock. Plus a lot of stock brokers will not purchase shares below a certain amount or fraction of a share. Of course if your dividend don't even amount to the price of a share, then reinvesting it is the best thing to do.
Since you are taxed on the dividend the year you received it, a better way to invest is to take the money (after taxes) and place it in a Roth IRA and then purchase the stock there. Otherwise, you are going to have to pay the taxes on the dividend with income from other sources. (But some stocks will allow you to reinvest only a portion of the dividend and allowing you to have money to pay the taxes on it.) Plus it is much easier to figure out the capital gains tax when you sell those shares, as there will no tax. (providing you're 59 1/2 and retired)
So if you think about it, even if Apple had repatriate the money before this new tax bill, Apple would have been allowed to deduct the foreign tax paid from the taxes owe. So with a 35% tax rate and deducting 10% in foreign taxes paid, Apple would had only paid about 25% anyways. A saving of 10% is no big deal, even though for Apple, it amount to lots and lots and lots of money.
Now, if Apple were allowed to deduct the foreign taxes they paid on this money, from the 15%, then I agree with you that ....." they "pay", nearly nothing.....".
IBM is transforming itself pretty rapidly. The stock may get very pricey very soon.
In other words, if one buys the stock 10 days before the dividend payout, one must hold on to the stock for at least another 50 days after the payout. Then the dividend is deemed "qualified", even if one no longer own the stock at the end of the year. If one owned the stock for 60 days or more before the dividend payout, then one can sell the stock right after receiving the dividend and the dividend is deemed "qualified".
But if one buys the stock 10 days before the dividend payout and sell the stock 10 days after the payout, the dividend is not deemed "qualified" and taxed as regular income. Even if one were to later buy back the shares by the end of the year.
A March 2016 report claims that 27 profitable companies in the S&P500, including Level 3 Communications, United Continental and GM paid no federal income tax in 2015 in spite of reporting pre-tax profits.
In about 1953, corporate income taxes were about 6% of GDP (although lower before and after). In 2020, they'll be about 2.2%. This is one of the reasons we don't have the money for infrastructure. Although I think that projection was made before the current tax bill was passed. If the current tax bill results in more companies actually paying taxes, albeit at lower rates, perhaps it will be beneficial. But I doubt that will be the case. But I will give Apple some credit because they do seem to be using that money to hire more people and expand their operations. Many other CEO's already told Mnuchin that the reduction in taxes would not result in more hiring.
And meanwhile, the tax bill seems to really screw small companies, who now lose a lot of deductions unless they are pass-through businesses.