Tax cut at work: Apple plans to bring $350 billion it's had parked overseas back to the U.S.

The boss has been talking about this since the days when I was his syndicator at the old North Star site, and that was before (and during) his presidential campaign. There are trillions of dollars U.S. companies have parked overseas, and they've left them overseas for years because bringing the money home meant paying a 35 percent tax on repatriated profits. It's hard to imagine tax policy more insane than this. Not only have the companies already paid taxes on the profits in the countries where they made them, but the tax served as a massive disincentive to bring that money back home. Why would you bring it home minus 35 percent when you could invest all of it elsewhere?

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The recently passed tax reform did two things with the repatriated profits tax: 1. Anything that's out there now can be brought back at a one-time rate of 15.5 percent. Anything earned overseas from this point forward can be repatriated tax-free. We wrote during the debate over the bill about the likelihood that getting rid of the tax would spur a massive infusion of cash back into the U.S. economy. And it's already starting, with Apple leading the way:

The headline from Apple is that it will make a $350 billion "contribution" to the U.S. economy over the next five years, although it's unclear exactly how the company came to that number. The company also promised to create 20,000 new jobs and open a new campus. It said it expects to pay about $38 billion in taxes for the horde of cash it plans to bring back to the United States. This implies it will repatriate virtually all of its $250 billion in overseas cash.

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Apple also said it will spend over $30 billion in capital expenditures over the next five years. About $10 billion in capital expenditures will be investments in U.S. data centers, the company said. Apple added that it will spend $5 billion as part of an innovation fund, up from the $1 billion CEO Tim Cook announced last year on CNBC's "Mad Money." The job creation will include direct employment and also suppliers and its app business, which it had already planned to grow substantially (app developers earned $26.5 billion in 2017.) The new campus will focus on customer support.

Every cent of this is a boon for the U.S. economy. In addition to the 20,000 new jobs, you'll get construction jobs on the new campus project, new and/or improved products, and lots of new contracts for outside suppliers. It's extraordinary to think that Apple is bringing home basically all the money its been keeping overseas, all because of the end of this insane tax.

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When Democrats were running the show, they refused to get rid of the tax on the grounds that it would allow rich, greedy corporations to "get off" when they should be "paying their fair share." As a result, the rich, greedy corporations paid the U.S. Treasury nothing. Now Apple will be forking over $38 billion, which might even buy a toilet seat or two. Tim Cook is a liberal who probably doesn't like taking a step that makes President Trump look good. But he answers to his shareholders, and not doing this would have been foolish for Apple. Expect to hear about lots more U.S. companies following suit, and expect the boost this trend gives to the U.S. economy to be a lot bigger than most had anticipated.

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