Trump tax plan would hit Apple’s overseas earnings

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President Trump wants to stop companies shifting their profits to overseas tax havens.
Photo: Gage Skidmore/Flickr CC

As part of his plans for cutting business rates, President Donald Trump and congressional Republicans have proposed a new tax that could have a big impact on Silicon Valley tech giants including Apple.

The proposal — designed to stop companies from shifting their profits to overseas tax havens — calls for “rules to protect the U.S. tax base by taxing at a reduced rate and on a global basis the foreign profits of U.S. multinational corporations.”

There are no further details about what these tax rates may be, but it’s already causing lobbyists representing companies such as Microsoft to come out fighting. Opposition will likely increase further when more details are presented at the Senate Finance Committee hearing Tuesday.

Not all bad news

Things aren’t all bad for big multinationals, however — since the rules would allow them to repatriate foreign earnings by paying a low tax — possibly around 10-15 percent — on them. As the Seattle Times explains:

“Here’s a general idea: Congress would set a low tax rate — say 15 percent — that would serve as a minimum rate for companies on their offshore subsidiaries’ earnings. Any multinational that paid more than that minimum to foreign governments wouldn’t owe the tax in the U.S. But if a company’s overseas taxes fell below the minimum — a sign that it made heavy use of tax havens — the company would pay the U.S. the difference.”

In a December 2015 interview with 60 Minutes, Charlie Rose prodded Tim Cook about Apple’s massive pile of cash stashed overseas. At the time, Cook said that, “It would cost me 40 percent to bring it home, and I don’t think that’s a reasonable thing to do.”

While the idea of being taxed on its overseas profits by the U.S. government sounds like a negative for Apple, some economists have argued it would actually be a positive. According to Citi analysts, a move such as this could help boost Apple’s profits by a whopping 16 percent.

Then again, the European Union has already stated that even repatriating Apple’s profits wouldn’t halt the E.U. investigation into the company’s tax affairs.

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