A $350 Billion “Contribution” to the U.S. Economy? No (Premium)

Apple this week announced that it will repatriate almost $252 billion in cash that it holds abroad. But this is Apple, so it is marketing the move as a massive "$350 billion contribution to the U.S. economy." Which is not true.

"Combining new investments and Apple’s current pace of spending with domestic suppliers and manufacturers — an estimated $55 billion for 2018 — Apple’s direct contribution to the US economy will be more than $350 billion over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products," the Apple announcement notes.

That sounds impressive. Heck, it is impressive, regardless of the fact that I'm about to tear it all down like a house of cards. Apple simply exists in an economic sphere that makes most countries jealous, let alone its erstwhile competitors.

But Apple is not "contributing" to the U.S. economy, it is investing in itself. And the figure is not $350 billion. It's about one-tenth that.

Thanks to the new U.S. tax code, which will let Apple repatriate cash held overseas for a one-time low rate, Apple will now spend about $37 billion more than it would have otherwise---on itself---over five years.

This math comes courtesy of The New York Times, which explains how Apple is marketing its move as something a lot more impressive than it is.

Apple currently holds 94 percent of its cash and cash-like assets---or about $252 billion---outside of the United States. It will now bring most of that back to its own country, paying a one-time tax bill of $38 billion. It will also save $43 billion, or over 50 percent of the normal tax. That's $43 billion it is not "contributing" to the U.S. economy, by the way.

But where does that $350 billion figure come from? Apple says this is the "direct impact" that it will have on the U.S. economy over the next five years. But Apple was already going to directly impact the U.S. economy by a huge sum over this time period. It is, after all, the biggest company in the United States.

"Apple’s current pace of spending in the United States is $55 billion for 2018, so it was already on track to spend $275 billion over the next five years," the New York Times explains. "After the $38 billion tax payment is subtracted, that leaves its new investment at roughly $37 billion over the next five years."

$37 billion of direct impact---not a "contribution"---over five years. Or about $7.4 billion per year. To put this number in perspective, Apple's net income for fiscal 2017 was $48.4 billion. Its net income in just the most recent quarter was $10.7 billion.

As the New York Times further notes, "Apple had consistently spent tens of billions of dollars on areas like staffing and capital expenditures in recent years. Bringing back the overseas cash ... does little to aid its expansion."

Anyway, kudos to Apple. It has managed to turn international cash hoarding---remember, ...

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