US Senators Propose Bill For Apple to Repatriate Cash at Low Tax Rate
Two senators – Rand Paul (R-Ky.) and Barbara Boxer (D-Calif.) – have teamed up to propose a bill that would allow Apple to repatriate its offshore cash. Apple’s cash pile is approaching $200 billion, but much of it is outside the US, which means the company has two solutions: either to spend it out there, or bring it back to the US at a cost of handing over 35% to Uncle Sam (via The Hill).
In other words, there is little incentive to bring it home. The bill proposed by the two aforementioned senators addresses this issue. The “Invest in Transportation Act” would create a tax holiday for giants such as Apple, Microsoft, and Google to bring that money back home and pay only 6.5% in tax. That’s a huge discount compared to 35%, which could bring back roughly $2 trillion in corporate tax revenue currently in foreign banks.
Since the taxes would go to the Highway Trust Fund, it could save the Fund from running out of money, say the senators. Since the Highway Trust Fund has been relying on gas tax money since 1956, it is now threatened with running out of money in May 2015 unless Congress intervenes, because the latter is against raising the gas tax.
Fact is, Sen. Rand Paul (R-Ky.) has been publicly on Apple’s side. Back in May 2013, he blasted his colleagues for holding a hearing to examine Apple’s alleged tax practices. You may recall the buzz around that.
Also, last year in December, right in the middle of a hot public debate about the encryption of smartphones and government surveillance, the same senator said that Apple and he had the same strategy, courting the same demographic Apple was aiming at with the encrypted iPhones.