Apple coming back home: Tax break helps create US jobs

After the most recent tax bill, Apple will be paying a lot less in taxes than it used to. Some of that money will be spent back home in the US.


    Apple has long been criticised for its huge cash pile of some $250bn that it made through its foreign subsidiaries, but refused to repatriate to the US in order to avoid paying US taxes - that's 94 percent of its total cash.

    Under the new tax bill passed at the end of last year, Apple and other multinationals got what they long wanted - a reduction in the tax rate on those holdings from 38 percent to 15.5 percent.

    However, Apple has to pay that 15.5 percent, whether it repatriates the money or not.

    On Wednesday, Apple announced its tax bill will come to $38bn - a saving of some $42bn, according to analysts.

    The company also announced it will open a new campus in the US, hire 20,000 more employees and spend $350bn over the next five years.

    However, it is not clear whether the plans are new; and Apple has not announced any changes to its manufacturing model, which is based on Asian factories. Nor is it clear how much of the money it plans to repatriate.

    'Trump's plan is working' 

    Analysts say much of any repatriated money may go to paying down the $97bn in debt that it incurred as it rewarded its shareholders in stock buybacks and dividends, and in giving its shareholders even more billions.

    On Wednesday, the Dow Jones hit 26,000 points for the first time - an indicator that the president has used to suggest a booming economy. Apple's shares also hit a record closing price.

    "So it seems like President Trump's plan is working as he laid it out: Tax reform and tax cuts he wanted seem to be taking effect in a very meaningful way, in that jobs are going to be coming back from overseas, and, most importantly, money that's been overseas is coming back," Rinah Shah, strategist and consultant, said.

    "But the main beneficiaries of the DOW's rally and Apple's announcement will be the minority of Americans already raking in the cash from their stock market investments," Shah added. 


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