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Despite Apple's Complaints, No Shift Seen On Cash Repatriation

This article is more than 10 years old.

While Apple yesterday finally succumbed to investor pressure (and common sense) and announced plans to start paying a dividend, the company made it clear that all of the cash it plans to pay out will come from domestic sources: the company is not going to touch the $64 billion or so it has stashed away overseas. The reason: repatriating the cash would requite a tax hit that analysts have estimated to be in the vicinity of 30% of the total.

Apple's approach to the overseas cash seems simple: wait for a more supportive stance by Congress to change the rules.

But as the Web site Talking Points Memo observes this morning, the White House has not shifted away from its opposition to reducing the penalty for repatriated cash. The site says that

"A White House official told TPM that the Obama Administration specifically chose not to propose a repatriation holiday — a temporary tax break on overseas cash brought back into the U.S., which Apple and other tech companies have sought for years," TPM reports.

The story notes that Bloomberg reported in September 2011 that 160 lobbyists have been pushing for a cash repatriation holiday similar to one Congress established in 2004. In 2011, three bills were introduced that were targeted at lowering the corporate tax rate to around 5%. One of those, the Foreign Earnings Reinvestment Act was introduced by Sen. Kay Hagan, a North Carolina Democrat.

“Today’s announcement by Apple only highlights the need to pass commonsense legislation that would allow American companies to put $1 trillion of foreign earnings back to work in the U.S economy,” Sen. Hagan told TPM. “Our stagnant economy demands practical, creative and bipartisan solutions right now. That is why Senator John McCain and I introduced the Foreign Earnings Reinvestment Act. This bill would trigger the flow of an estimated $1 trillion back into the American economy by temporarily allowing companies to return profits earned overseas to the U.S. at a temporarily reduced tax rate.”

Don't expect anything to happen before the November election.