Apple made an aggressive pitch for a corporate tax holiday Monday, stressing that it plans to keep more than $60 billion parked offshore until Congress makes it easier for companies to bring those profits home.
The warning from the nation’s most valuable company came as Apple announced it would pay a dividend to shareholders and buy back stock, moves that will cost about $45 billion over three years.
But Apple — which, like several other Silicon Valley titans, has spent months lobbying for more flexibility to repatriate offshore profits — said it will rely exclusively on domestic cash reserves for the transactions and will not touch the billions in profits held abroad.
"Repatriating the cash from offshore would result in significant tax consequences under current U.S. law," Apple Chief Financial Officer Peter Oppenheimer said on a conference call.
Apple and other backers of a repatriation holiday — including Oracle, Cisco, Microsoft and Google — threw their support last year behind the WIN America Campaign, a lobbying coalition that urged Congress to temporarily reduce the tax rate that U.S. multinationals have to pay on offshore profits.
As it stands, companies have to pay their full corporate rate, as high as 35 percent, on profits made anywhere in the world. The corporations can defer paying those taxes until the profits are brought to the United States, and also receive credits for taxes paid to foreign governments.
Supporters of a tax holiday say that U.S. companies have, according to some estimates, more than $1 trillion held abroad, and that making it easier to repatriate those funds could quickly inject cash into the U.S. economy.
Under repatriation measures introduced in both chambers of Congress, multinationals could potentially pay a tax rate as low as 5.25 percent on offshore profits.
But while those proposals have supporters in both parties, the measures have powerful opponents and have yet to move far in Congress. Skeptics of the holiday point to several reports that have said a previous tax holiday, enacted in 2004, did little to stimulate job creation.
The Obama administration, which released a corporate tax reform framework last month, is among those that feel the last holiday did little to help the economy. Administration officials have for months said they are firmly opposed to a repatriation holiday, and that they would not consider the idea outside of the broader context of tax reform.
“I think generally we're pretty clear that we're opposed to a repatriation holiday, that the evidence with the previous one indicated that lots of the resources were used for stock buyback, dividend payments and so on,” a senior administration official said last month.
Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, included a repatriation provision in a draft tax reform proposal last year that would permanently limit U.S. taxation of offshore profits.
But Camp, along with House Speaker John Boehner (R-Ohio), also disagreed with House Majority Leader Eric Cantor (R-Va.) late last year over whether to include a repatriation holiday into the House GOP’s payroll tax deal. The three Republicans all support repatriation, but have not always been on the same page over whether to push for a holiday or include repatriation as part of a wider tax reform agreement.
Once repatriation failed to make the year-end tax deal, many Washington tax observers felt it faced long odds this year, given that 2012 is an election year and some top lawmakers are preparing a push for tax reform in 2013.
But the comments from Apple indicate that the lobbying efforts for a holiday could soon be ramped up again, and some on K Street have said supporters can use the argument that the company might have made even larger dividend payments under a repatriation holiday.
"We have expressed our views with Congress and the administration. We think that the current tax laws provide a considerable economic disincentive to U.S. companies that might otherwise repatriate the substantial amount of foreign cash that they have," Oppenheimer said. "That's our view, and we've expressed it."
But other tax lobbyists have said they are skeptical that taxes played that much of a role in the size of Apple’s dividend payments — with one saying that the tech giant had been “politically tone deaf” in making the argument that it needed a tax holiday on the same day it announced a roughly $45 billion investment.
“The compelling argument is: We need this money,” the lobbyist said. “Well, they sure make it seem like they don't.”
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10:14 AM
PFF
System Bot
Formula88 Member
Posts: 53788 From: Raleigh NC Registered: Jan 2001
Make it easier to bring profits home? Not likely. Obama's already talking about taxing profits made in foreign countries.
quote
The Obama administration is expected soon to release proposals for reforming the corporate income tax code. In his State of the Union address last month, the president unveiled one such proposal—a minimum tax on corporations’ overseas profits. “No American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas,” he told a joint session of Congress.
Doni, other than the last two paragraphs at your link, I don't see any major difference in any of the referenced articles. I know I'm not smartest person in the whole wide room, but what am I missing? What I see here, in total, is more stupid tax policy out of Washington.
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12:35 PM
carnut122 Member
Posts: 9122 From: Waleska, GA, USA Registered: Jan 2004
I think paying for a huge military to protect America's economic interests abroad should also be paid for by those American economic interests. I don't have goods (as in millions of new I-pads)that will be hijacked by Somalian pirates, but my taxes pay to patrol these waters. Why shouldn't Apple (etc) be helping to foot the bill? American corporations benefit from many aspects of the government, it bothers me to see them getting tax "amnesty."
[This message has been edited by carnut122 (edited 03-22-2012).]
The article does point out the problem is even when given the tax holiday, the corporations don't spend the money the way government wants them to, i.e. paying dividends instead of creating new jobs. If that's the reason for trying to tax overseas earnings, it's no wonder more companies keep as much of their money out of the country as possible. There's no incentive to repatriate it, and even when they do, they're lambasted if they don't spend it "properly."
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09:10 PM
Mar 21st, 2012
dratts Member
Posts: 8373 From: Coeur d' alene Idaho USA Registered: Apr 2001
I enjoy my used iPhone and my first gen iPad, but I'm not happy with Apples taking advantage of cheap Chinese labor and now that I know they are keeping all their money abroad for tax purposes, I'm less impressed than ever. Apple seems to have a better applications of future technology than other companies, but I would imagine that their competitors would come to the same result eventually. Since I buy their products used I'm not sure how much I'm supporting them, but I will look for alternatives to Apple that have business practices I like better.
Hasn't Apple historically supported big-spending democrat politicians? That seems a bit ironic...
Just sayin'....
Yes and no. Apple has always played up its "artist/bohemian" image for consumer gain much in the same way Michael Moore is one of the best capitalists in the world by making a fortune selling movies that extoll the virtues of destroying capitalism. Even when my father was there (a staunch conservative) he played up to Hollywood elitists and to this days serves on the AFI Board. The reality is that most companies hedge their bets. They will donate to all candidates. Some more than others but it is all about business, not politics.
