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"Apple's plain purpose," writes Rice, "is to curry favor with the Trump administration by creating the mirage of positive economic news closely following the tax overhaul. The goal is to obscure the fact that the new law is a massive giveaway to huge multinational corporations like Apple."

Apple Polishing: The Tech Giant’s Devious Attempt to Support Trump’s Tax-Cut Fantasies

The company's real goal here is to obscure the fact that the new law is a massive giveaway to huge multinational corporations like Apple.

Apple’s recent announcement touting plans for American investments and what it will pay in U.S. taxes on its offshore profits is full of misleading statements, vague promises and spin. Conservative commentary on the announcement (including by President Trump) has read into it a claim that’s not there: that the company’s investments are due to the new GOP tax giveaway law.

Nevertheless, Apple’s plain purpose is to curry favor with the Trump administration by creating the mirage of positive economic news closely following the tax overhaul. The goal is to obscure the fact that the new law is a massive giveaway to huge multinational corporations like Apple.

  • Nothing in Apple’s announcement links its planned investments in the U.S. to the new GOP tax law. Despite conservative inferences, the only mention of the tax overhaul is in reference to how much the company will pay in U.S. taxes on its accumulated offshore profits under the new law’s provisions. There’s no clear indication that any of the described investments were decided on because of the new tax regime.
  • The $38 billion in U.S. taxes Apple congratulates itself for paying on its offshore profits is less than half what it owed before the GOP tax giveaway was signed into law. Under the old law, Apple owed $78.5 billion on its $252 billion in accumulated offshore profits—$40 billion more than what it will now pay. That was roughly 10% of the total $750 billion Corporate America owed on its collective $2.6 trillion in overseas earnings. The new law will collect only $339 billion on that offshore corporate loot, handing profit-offshoring corporations a $400 billion tax cut, a full tenth of which goes to Apple.
  • The $350 billion in American investments over the next five years that Apple presents as an acceleration of domestic spending includes its one-time tax payment and is mostly a continuation of existing plans. As noted in a New York Times analysis, the company admits it was already planning to spend $55 billion in 2018—at that pace it would spend $275 billion over five years anyway. Subtracting this already-planned spending and the $38 billion tax payment (which is a legal obligation, not optional spending) brings Apple’s new American investment down to just $37 billion over five years, a relative pittance. And again, there is no statement by Apple that this is due to its huge tax cut.
  • Assuming Apple is really only committing to roughly $7.5 billion a year ($37/five years) in new American investments, the bulk of its hundreds of billions of dollars in offshore profits will apparently go somewhere else—most likely into the pockets of wealthy shareholders. Even after paying its deeply discounted tax bill, Apple will still have over $200 billion in offshore cash to use however it wishes. As noted by tax-law expert Edward Kleinbard, Apple offers no guidance on what it will do with all that money. But judging by both history and the announced plans of other corporations, a lot of the cash will probably go to rich shareholders (including top Apple executives) in the form of increased dividends and stock buybacks. Over the past six years, Apple has used these two methods to return over $225 billion to mostly wealthy shareholders, with an announced goal of $300 billion by early 2019.

© 2021 Fairness and Accuracy In Reporting (FAIR)

Will Rice

Will Rice is a senior writer for Americans for Tax Fairness.

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