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  • Apple Could Potentially Face a Large Tax Bill with Obama's Proposed Budget Plan


    President Obama recently put a new budget forward that includes a one-time 14% levy on earnings held by US companies overseas followed by an ongoing 19% tax on foreign profits, regardless of whether the money is repatriated or not. These funds would be allocated to a $478 billion public works plan. The new taxes would offer “no loopholes or opportunities for deferral” according to the White House proposal. Corporate tax rates would be reduced from 35% to 28% while companies which manufacture goods in the US would benefit from a lower 25% rate.

    So what exactly does this mean for Apple? The mandatory 14% tariff could cost Apple as much as $20 billion up front given that the company’s overseas pile of cash has reached as high as $140 billion last year. Unsurprisingly this has led Apple to lobby for a temporary tax holiday that would allow the return of foreign earnings at a discount to the current 35% level. This idea has bipartisan support in congress with a bill set to be introduced by Senators Barbara Boxer and Rand Paul that would lower the repatriation rate back to 6.5% for a limited time.

    President Obama opposes that idea and instead is pushing for a recurring 19% tax on foreign earnings that would be levied even if the funds were left overseas. Companies would then repatriate that money without additional taxes but it would still represent a steep tax increase, even when combined with the corporate rate cut. This effect could be quite important for companies like Apple which make an increasingly large portion of their revenue from outside of the country. Roughly $44 billion of Apple’s $75 billion in income during the holiday quarter was earned internationally in Europe, Greater China, Japan and the rest of Asia Pacific. As one might expect, business groups from all over have opposed Obama’s plan and as a result it’s unlikely to get much support from the Republican-controlled congress either. We’ll still have to wait and see what happens though.

    Source: White House (Medium) via AppleInsider
    This article was originally published in forum thread: Apple Could Potentially Face a Large Tax Bill with Obama's Proposed Budget Plan started by Akshay Masand View original post
    Comments 6 Comments
    1. SpiderManAPV's Avatar
      SpiderManAPV -
      Not to get into any sort of political argument, but how can it be legal to tax money in other countries?
    1. tridley68's Avatar
      tridley68 -
      Obama is such a jerk and people wonder why business move to other countries .
    1. iBwizzle's Avatar
      iBwizzle -
      Quote Originally Posted by SpidermanAPV View Post
      Not to get into any sort of political argument, but how can it be legal to tax money in other countries?
      The government is in debt, the money has to come from somewhere.

      Quote Originally Posted by tridley68 View Post
      Obama is such a jerk and people wonder why business move to other countries .
      Oh yes, let's just blame one person and overlook the other 500+ people in office.
    1. jamesgunaca's Avatar
      jamesgunaca -
      Apple hasn't been breaking the rules by stashing money in other countries (money that was made here) and no one can blame them for trying to avoid paying more taxes; but they've got the money and we've got debt to pay and an infrastructure to improve (an infrastructure that Apple benefits from as its millions of devices are shipped around the US daily).

      Apple has the cash. They should pay.
    1. unison999's Avatar
      unison999 -
      Obama is taxing U.S. citizens abroad as well, even when the property they purchased with foreign funds and earning from foreign company.
      It is easy for Apple to get out of this, make itself a foreign company like Samsung. Since everything is manufactured in China, might as well call it a Chinese company. Just not sure what kind of taxes Apple will have to pay to sell to U.S. consumers, as well as other foreign countries when they are no longer U.S. company. They would lose preferential treatment from foreign countries they give to U.S. companies, all the tax incentives given to U.S. companies etc. example: many countries impose high import tax to protect domestic businesses, U.S. negotiated trade treaty so U.S. companies to not have to pay that.
    1. unison999's Avatar
      unison999 -
      U.S. government negotiate trade with countries around the world to benefit U.S. businesses, like lower to no import taxes.
      U.S. uses trading with U.S. as a weapon, if you want to sell your product to U.S. consumers you better cut us a deal.
      Which Apple have benefit from quite a bit.
      So why is Apple not paying taxes for benefits they received as U.S. company?
      Keeping money abroad is more like circumventing around paying taxes, and it is wrong.