Now that Apple has nearly $200 billion in cash equivalents, Senators in the U.S have proposed a repatriation tax break that will help the Cupertino-based company bring some of that money home.
Apple may get a chance to repatriate its huge overseas funds
U.S. Senators Barbara Boxer and Rand Paul last week announced the “Invest in Transportation Act of 2015” which aims to help companies like Apple bring their enormous foreign cash reserves back to the U.S. at much lower rate, and also to use the proceeds in the Highway Trust Fund.
The proposed bill has not yet been introduced, but would lower the tax rate for repatriated foreign income from 35 percent to just 6.5 percent, and companies would have up to five years to move their cash. Furthermore, only transfers that exceed the company’s annual average repatriation would be eligible for the lower rate of tax.
The money would go to boost federal infrastructure funds, and would also force companies that repatriate cash to use the money for hiring, increasing wages and pensions, environmental standards, and so on. It would be forbidden to use the funds for executive compensation, dividends or stock buybacks for three years after the repatriation scheme comes to an end.
“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”.
In the company’s latest financial results, Apple reported that it now has $178 billion in cash, an increase of $24 billion over the previous quarter, but it did not reveal how much of that is held overseas. Apple is already one of the largest corporate taxpayers in the U.S. and has lobbied for corporate tax reforms in recent years.
This is not the first time that such a tax break scheme has been proposed for the benefit of infrastructure spending. Another program was debated in June 2014, but was unsuccessful.
SOURCE: AppleInsider
Larry Banks is a keen follower of technology and finance. He has worked for a variety of online publications, writing about a diverse range of topics including mobile networks, patents, and Internet video delivery technologies.