CUPERTINO (KPIX 5) — The new tax plan will probably limit the amount of state and local taxes that people in the Bay Area can deduct.
But Apple stands to cash in. And cash in big.
Just how much will the tax bill go down, for corporations like apple?
The Financial Times crunched the numbers and the headline is staggering: “Apple Will See Up To $47 Billion Potential Benefit From Tax Reform.”
According to The Financial Times, Apple currently has the largest stockpile of cash of any company on the planet, about $252 billion stashed in various accounts overseas.
If the company were to bring all that money home to the U.S., Apple would pay the current corporate tax rate of 35 percent, or about $78 billion in taxes.
However, under the current version of the Senate bill, that tax rate would drop to 14.5 percent, and Apple would then pay $31 billion.
That’s a tax bill reduction of $47 billion.
Caroline Chen is a tax professor at San Jose State University and says Apple is just following the law, and that now at least the federal government will get some taxes.
We asked her: If the tax rate never changed, would that money stay overseas forever?
“Conceivably, yeah. Absolutely,” Chen said.
Chen said, “So you’re talking about under the current regime they pay zero. And under the new regime, they would at least have to pay $31 billion. So again, which is better, zero or $31 billion?”
Ben Bajarin with Creative Strategies is one of the country’s top Apple analysts, and says Apple is a pragmatic company. And that kind of cash won’t change it much.
Bajarin said, “I would expect them to use it across the board holistically. Infrastructure, buildings, hiring people, more job creation, but also put it back in the R & D and create some of the future products that will lead them forward.”
Realtor Mattie Baker was showing homes near the new Apple campus, and she’s optimistic about how Apple will spend its repatriated profits.
Baker said, “They’re going to get a tax break, yes. But, the idea behind that is they’re going to create jobs.”
Neighbor Steve Kwiatkowski said, “It’s a high tax rate, and it’s high for me too. I wish I could get a break.”
Kwiatkowski lives across the street from the new campus, and he’s not happy about the impending loss of some his own tax deductions.
But has mixed feelings about the tax reform bill.
“I understand giving the corporations a break, I mean they take a lot of risk to run a business. It makes sense,” Kwiatkowski said. “But at the same time, doing that at the expense of people who can’t afford health care just doesn’t make sense to me.”