Apple has a massive pile of cash sitting overseas and the U.S. Senate is now weighing options on how to entice Cupertino to bring all $138 billion of it back to American soil.
Senate Democrats and Republicans are reportedly in discussions about passing legislation that would give American companies like Apple and Google a one-time tax break if they repatriate profits stashed overseas.
Apple’s huge overseas stash of cash has come under scrutiny by the Senate and now the E.U. over the last year, but as the Senate looks to bolster the diminished Federal Highway Trust Fund, the proposed legislation could be a huge break for Apple that could save it tens of billions of dollars.
For Apple, this is a $40 billion decision. (35% vs 5%) Senators weigh tax ‘holiday’ to help fund highway repairs http://t.co/gEeq6sEDb0
— Daisuke Wakabayashi (@daiwaka) June 11, 2014
Overseas money brought in by the tax break proposal would generate billions of dollars that would go towards funding federal transportation projects after funding is expected to run out by late August.
U.S. Senate Minority Leader Mitch McConnell said the idea of a tax holiday has been discussed among Republicans and has generated “a good deal of support.” Meanwhile Harry Reid and Rand Paul have also been in talks about the repatriation holiday, according to Reuters.
The proposed plan is still far from being put into law, but it would give companies a one-time reduction in the amount of taxes paid on profits earned abroad, which would hopefully be enough to entice companies to bring back their earnings.
U.S. companies can hold their overseas profits offshore indefinitely, but pay a 35% tax when bringing that money back to the states. Congress passed a similar tax holiday in 2004 that allowed hundreds of companies to bring overseas profits back to the U.S. at one-time 5.25 percent tax rate.
- Source Reuters