OPINION:
The announcement on Wednesday that Apple Inc. will bring $350 billion in cash parked overseas — that’s billion with a B — home to the United States, to invest here and create as many as 20,000 new jobs, is likely to be the economic story of the year.
Donald Trump, who made his boast that he would “make America great again” the centerpiece of his campaign for president, couldn’t have designed this play better on a blackboard.
The Trump tax bill enacted in December enables American corporations to “repatriate” trillions of dollars in cash reserves that companies deposited overseas to exploit low tax rates ranging from 8 percent to 13 percent. Apple alone has held $252 billion abroad, 94 percent of its cash reserves, and had said it couldn’t bring its foreign earnings back to the United States until there were changes in the tax code. Now the tax code has been changed, and Apple looks as good as its word.
No one knows for sure how much money has been put overseas, mostly in China, India, Ireland and the Cayman Islands, or how much of that will be brought home. Estimates range from $2 billion to $5 trillion. But it’s a lot.
Mr. Trump eagerly describes the news as a win-win for the American economy, and it’s hard, even for his most fervent critics, to argue with that. The United States gets the money, whether invested to invest in new ventures across the continent to create jobs, or to pay to shareholders who can invest the money in new ventures of their choosing. The federal government gets billions of dollars of tax collections to use to reduce the national debt.
Apple’s common stock shares quickly rose 1.7 percent, to $179.10 per share in New York, and the company told its employees they would receive bonuses of $2,500 each. Unless you’re an irredeemable and implacable foe of the president, what’s not to like?
Some liberals with unusually hard heads dismissed the tax bill as a gimmick to make the rich richer and the poor poorer, legislation that would only make saps of the middle class. But in the first few weeks since the president signed the law, money has started pouring into the United States. Apple’s announcement alone proves the president’s critics wrong. The company, based in Cupertino, Calif., will bring home $350 billion to be invested over the next five years. The technology giant, one of the three largest companies in the world, has earned millions revolutionizing telephones, home computers, watches and how music is sold, and says it will use the money to build a new campus somewhere in the United States for data analysis and product development. At least $35 billion will be put into an “innovation fund.”
Why Barack Obama, a fan of “redistribution,” didn’t do this years ago is a great mystery. There would have been earlier opportunities to make more money to distribute. The Apple announcement makes a mockery of House Minority Leader Nancy Pelosi’s claim that the tax cut only leaves “crumbs” for middle class workers. Some crumbs.
Apple and other companies, including Intel Corp., makers of crucial computer components, are responding in a positive way to Trump criticism that such major companies have ignored American workers in creating jobs. The new positions will likely have an even larger impact on the economy than Apple’s paying $38 million in taxes into the U.S. treasury. “The thrust here,” Erik Gordon of the University of Michigan’s Ross School of Business tells Bloomberg News, “is American jobs, jobs on American soil — build manufacturing here, don’t build everything in China. You can’t have an announcement of a million jobs. But you can have companies like Apple saying that we’re going to have 20,000 new jobs here. If other companies say they’re going to have new jobs, too, it does add up.”
Apple, for one of those companies, appears to have gotten the memo. “We are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” Tim Cook, the Apple CEO, says, perhaps hinting that the company intends to accelerate internal education programs. “We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”
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