Why a $38 Billion Tax Payment Is a Good Deal for Apple.
Apple has faced mounting criticism in recent years for avoiding taxes in the US and Europe. Wednesday, it offered critics 38 billion replies.
More precisely, Apple said it would pay an estimated $38 billion in tax to bring back to the US some of the cash it has stashed overseas over the years. Apple says the payment would be the largest tax payment of its type in history. But it’s also a pretty good deal for the company.
In the wake of the tax-cut bill approved by Congress last month, Apple also announced plans to invest $30 billion in the US over the next five years, to create 20,000 new jobs, spend more with domestic manufacturers and other suppliers, and build a new campus. But it's not clear how much those numbers represented an increase from Apple’s previous plans, or how much of it will be funded by the repatriated cash.
Apple, which declined to comment, also didn't specify how much money it will repatriate. The company had $252.3 billion in cash and "cash like" assets overseas, according to a filing with the Securities Exchange Commission last year. Under the new tax plan, Apple and other companies must pay taxes on foreign profits parked overseas. Companies aren't required to actually move those funds back to the US, but there's little reason for Apple to keep its cash abroad once it's paid the tax, says Edward Kleinbard of the University of Southern California Gould School of Law.
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