FYI: Apple’s announcement on Wednesday that it will repatriate most of the estimated $274 billion that it holds in offshore earnings is great news for the United States. Uncle Sam will get a one-time $38 billion tax payment. The company promises to add 20,000 jobs to its U.S. work force, a 24 percent increase, and build a new campus. Another $5 billion will go toward a fund for advanced manufacturing in America.
C’mon. What’s with the long face?
In December this column warned that hysterical opposition to the Republican tax bill was a fool’s game for Democrats that could only help Donald Trump. Yes, there were things to dislike in the legislation, from both a liberal and a conservative perspective.
Regards,
Ted
https://www.nytimes.com/2018/01/19/opinion/clueless-versus-trump.html
Comments
To Satisfy Its Investors, Cash-Rich Apple Borrows Money (NYTimes, April 30, 2013) Instead of Apple paying its taxes, it's getting doubly rewarded - paying a fraction of the taxes it was liable for, and mollifying its shareholders with cheap money made possible by Fed-inspired low interest rates.
If Apple had better use for that money than buybacks, it would have done something else. As it turns out, prior to repatriation, Apple was already spending tons of money domestically.
Apple's $350 Billion U.S. Economic Contribution Was Already In The Cards
(Forbes, Jan 19, 2018, opinion by Chuck Jones; no, not that Chuck Jones)
Finally, we need to be clear on what "offshore" means. It doesn't mean that the money was actually in overseas banks or investments. It just means that Apple couldn't spend the money domestically. It could, and did, invest that money in Treasuries and corporate securities (curious, since it was floating its own paper at the time - perhaps even making a profit on that arbitrage?).
Beware the $500 Billion Bond Exodus (Bloomberg Businessweek, Jan 17, 2018).
What is a "normal American?" What does this author really mean when he says that? Also, in the usual hagiography of St. Reagan authors like this one leave out the unpleasant fact that Reagan's tax cuts initially caused a recession as those receiving the breaks did not substantially reinvest them in the economy. Reagan ultimately had to raise taxes again, primarily on the poor and middle class via payroll tax increases. Trickle down eco has been a crock since day one.