Yesterday, Apple made a big announcement: the iPhone maker says it will be making investments that will be tantamount to a $350 billion contribution to the U.S. economy over the next five years. Apple says part of the investment will be in direct job creation, and that it plans to add 20,000 U.S. jobs in the outlined timespan.
Other components of the investment will relate to Apple’s spending with suppliers and manufacturers in its U.S. supply chain, something it says will comprise $55 billion in spending in 2018 alone, as well as “fueling the fast-growing app economy,” something the company will support by investing in coding education and STEM programs.
Apple goes on to tell us what doesn’t count towards their investment promise of $350 billion, and that’s the sales of Apple products, the taxes on Apple employee wages or Apple’s “ongoing tax payments.” But there is a not “ongoing” tax payment that’s being lumped into this equation. Components of the new tax bill put Apple on the hook for a two-tiered levy on its foreign earnings and the tech giant has, according to Bloomberg, the largest offshore cash reserves of any U.S. company, at over $250 billion.
The new rule means Apple will no longer be able to defer tax on its foreign income and must pay a one-time repatriation tax on all this cash, to the tune of $38 billion. Apple says it may be the biggest one-time tax payment of its kind in history. But it sounds so much worse than it is. Under previous rules, the company was able to defer taxes, but would pay a 35% levy when bringing the money back to the U.S. This one-time opportunity allows Apple and other global companies to bring all that cash back for 15.5%, which is a massive savings.
CEO Tim Cook said his company has “a deep sense of responsibility to give back to our country and the people who help make our success possible.” That is, of course, when it makes economic sense.