Apple plans to add $350B to the US economy — but that may not be as heroic as it sounds
Yesterday, Apple put out a self-congratulatory press release titled “Apple accelerates US investment and job creation.”
And it’s true: The company says it will not only pay $38B in taxes to move its entire foreign trove of money back to the US, but also add $350B to the US economy and create 20k new jobs over the next 5 years.
But there’s a little more to these numbers than meets the eye…
Let’s start with that $38B in taxes
For years, Apple’s avoided US taxes by hoarding a massive sum of cash abroad ($256B).
Now the time is ripe to bring this money back to the states because: 1) A new tax bill allows businesses to transfer money at a much lower rate, and 2) They’re facing mounting pressure to pay up overseas (the EU recently ordered them to pay Ireland $15.4B in back taxes).
Not to mention, the $38B they’ll pay is actually lower than what they would’ve paid out had they kept that money in the US to begin with (at the current 21% corporate tax rate, the taxes on $256B would be $53.7B).
And the $350B, 5-year “contribution” to the American economy?
First of all, this figure includes the $38B tax… which they are required by law to pay.
Secondly, the figure includes an expenditure of $55B per year (over 5 years) on materials from US manufacturers — exactly what they’re spending now. And as Slate writes, “Apple is literally saying it will continue business as usual.”
That leaves us with roughly $35B — or one-tenth of the $350B figure — that Apple actually plans to “accelerate US investment” with. Much of which will be used to build a new campus for technical support workers.
This isn’t to say Apple’s not doing great things for the economy
Even a few extra billion is nothing to scoff at, the creation of 20k new jobs is huge (that’s a 25% addition to their current staff), and their decision to move cash and future investments back to US soil will no doubt be economically impactful.
But at the same time, it’s kind of like a little kid hoarding his Halloween candy for 10 years before “generously” sharing it with his sister.