Apple’s got more money in the bank right now than you or I could ever make if we were giving thousands of lifetimes. Due to tax laws, however, most of it is kept overseas — a not unusual business practice for major multinationals, although that hasn’t stopped it earning Apple a ton of bad press.
Two U.S. senators have a plan to bring the money back to the United States, though — along with similar (smaller) cash piles held by other tech giants like Microsoft and Google.
And for once it’s a plan we think Cupertino might actually be happy to consider.
Proposed by Senators Barbara Boxer and Rand Paul, the so-called “Invest In Transportation Act” would give companies a repatriation tax break, allowing them to bring home their money and pay just 6.5% tax on it: representing an enormous discount on the usual rates.
There would be a few provisos attached to the scheme. Apple and the rest of the tech companies would only be able to spend the repatriated cash on R&D, public-private partnerships, and acquisitions. Much to the likely chagrin of activist investors like Carl Icahn, the money couldn’t be used for stock buybacks — or to pay out larger sums of money to execs.
The idea behind the plan is that the money, currently sitting out of reach of the U.S., could be used to pay for the Highway Trust Fund, which covers state and local infrastructure projects around the U.S.
But Tim Cook and others shouldn’t get too excited just yet, as the plan is already causing problems.
“Tax holiday proposals designed to pay for the transportation bill sound great until you look at the details,” Senator Orrin Hatch, Chair of the Senate Finance Committee said in a statement to The Hill.
Politicians like Hill are most likely looking at a previous repatriation tax holiday from 2004. That year, companies were given the opportunity to bring money back home from overseas for just a 5.25 percent tax. However, it was discovered later on that the 15 companies who brought the most money back home ended up cutting both jobs and R&D spending in the aftermath.
Via: Business Insider