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Apple’s $350 Billion Investment Plan Proves Trump Is A Business Genius



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Jan 19 2018
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Apple’s CEO Tim Cook doesn’t like Donald Trump. It’s not hard to understand why Mr. Cook (a liberalist) and Mr. Trump (a nationalist) don’t see eye to eye – until now. The Apple chief had previously blamed the U.S. president as a white supremacist and a racist who promotes “hate and bigotry” in the United States. He even slammed Trump’s decision to withdraw from Paris Agreement.

 

While both individuals have the opposite political views, they have finally found a common interest – business. Apple’s blockbuster announcement that it will repatriate almost all of its US$250 billion in overseas cash, create 20,000 new U.S. jobs, open a new U.S. campus, and invest US$350 billion to the U.S. economy ends any serious debate about the new tax reform law.

 

Yes, Trump’s controversial tax reform, which he signed into law at the end of December 2017, was the main ingredient contributing to the Apple’s latest plan of flushing the country with mountains of cash kept overseas. And thanks to the slashing of corporate tax rate to 21% from 35%, Apple Inc. would pay a one-time tax of US$38 billion on its overseas cash holdings.

Apple Cash Reserve - Tim Cook Rowing A Boat - Sea of Cash

Even without Apple’s pledge to invest US$350 billion in the U.S. domestic economy, the news of having the extra US$38 billion of tax from the technology giant is sufficient to prove Trump could better manage the country’s economy than his predecessor Barack Obama. Had Hillary Clinton won the presidency instead, there wouldn’t be extra US$38 billion tax, let alone US$350 billion investment.

 

Apple’s US$38 billion tax payment is the largest such sum announced in response to the major overhaul of the U.S. tax code pushed by Trump. That law is mouth-watering as it provides an incentive for U.S. companies to bring home offshore holdings, whereby companies are required to pay a one-time tax of 15.5% on overseas profits held in cash and other liquid assets.

 

It’s puzzling why Democrats and liberals couldn’t do a simple “Economy 101” such as lowering the corporate tax to boost business and attract investment. Cash sitting idling in overseas does not contribute anything to both U.S. companies and the government. U.S. companies have long pushed for such a change to enable them to repatriate overseas cash.

President Donald Trump meets Apple CEO Tim Cook

Trump deserves every single credit for creating a business-friendly environment and reforming the tax code which even Tim Cook finds hard to resist. In fact, Trump had no idea the explosive effect of his tax reform until Apple’s juicy announcement. The U.S. President was practically on cloud nine after Apple unveiled its ambitious investment plan that he personally called and thanked Mr. Cook.

 

Trump said – “In the news, I heard US$350 billion, I thought, ‘You mean US$350 million? That’s going to be a beautiful plant.’ They said, ‘No, it’s three-hundred and fifty billion dollars.’ And I just called Tim Cook and I thanked him.” He got so excited that he sang songs of praise for the Apple CEO – “Tim Cook is a great guy – the head of Apple.”

 

Although the plan is quite vague, Apple said it would directly contribute US$350 billion to the U.S. economy over the next 5 years, with the bulk – about US$55 billion this year – to be splashed on a new campus to house technical support for customers and US$10 billion toward data centres across the country. Initial fund for domestic manufacturing will be increased to US$5 billion from US$1 billion.

Happy Apple Employees

But Trump wasn’t the only happy guy after Apple’s announcement. The company also told its employees that each of them will get a bonus of US$2,500 in restricted stock. Apple has accumulated a whopping US$252.3 billion of foreign profit which is parked overseas. The stock market would get a boost when the large overseas cash brought home is used for share buybacks and dividends.

 

More importantly, Apple’s repatriation and reinvestment plan would lead other companies to do the same. The U.S. Joint Tax Committee estimated that the new tax should raise about US$339 billion over 10 years from all companies who currently stash their money overseas due to the old 35% tax bracket. About 311 large public companies are holding a US$2.65 trillion pile of cash in overseas earning.

 

No matter what the Trump haters say and argue, including that such taxes slash is “fiscally irresponsible” as it would increase the deficit by more than US$1.4 trillion over a decade, a strong economy is always the biggest factor in U.S. elections. So, thanks to Trump’s tax reform, those Republicans may get to secure their job come the midterm election this year.

debt-added-by-president-obama-vs-43-previous-presidents-2016

In actuality, a deficit of US$1.4 trillion over 10 years is peanuts to the U.S. economy, which has already accumulated US$20 trillion in external debt. After all, former President Barack Obama had added US$8 trillion to the U.S. national debt during his 8 years stint in the White House – averaging US$1 trillion every single year.

 

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