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.
This Apple is bananas
Nestlé sells its US candy biz to Ferrero
Nestlé, the Swiss maker of all things Butterfinger, Baby Ruth, and Crunch bars, has agreed to sell its US confectionary brands to Ferrero (the maker of Nutella) for close to $3B.
As Nestlé CEO Mark Schneider explains, “This move allows Nestlé to invest and innovate across a range of categories … such as pet care, bottled water, coffee, frozen meals, and infant nutrition.”
Why the change of heart?
The chocolate powerhouse has been pivoting healthier for some time, heeding Americans’ call for less fatty snacks. With the candy biz now only making up 3% of their US sales, this move will help them meet their goal of becoming a “high-tech health company.”
But cutting out sugar is only part of their new initiative: In December, the company shelled out $2.3B to acquire the supplement company Atrium Innovations -- reportedly “one of many” multibillion-dollar moves the company has made to wedge itself between food and medicine over the last decade.
Ferrero is reaping the benefits
This sale will make the Hazelnut maven the third-largest chocolate company in the world behind Mars and Mondeléz.
With Butterfinger and Baby Ruth added to their Nutella-focused arsenal, Ferrero will get the chance to further build out their presence in US markets.
That said, Ferrero doesn’t get to add the one true Nestlé mainstay to their delicious repertoire: Nestlé’s iconic Toll House baked goods. Because no health kick in the world is strong enough to resist Toll House.
The father of Angry Birds wants to build an underwater tunnel
Peter Vesterbacka, the red hoodie-wearing, eccentric game developer who created the all-mighty Angry Birds franchise, wants to change his forte from destruction to construction by building an underground tunnel between Finland and Estonia.
But this isn’t your everyday traffic tunnel: This one will cost $18B, span 80 miles, run almost entirely underwater, and connect the Tallinn airport (the capital of Estonia) to three destinations in Helsinki (the capital of Finland).
One of the stops being an artificial island of his own design. Naturally.
For context, the recently opened Gotthard tunnel in Switzerland is the largest traffic tunnel in the world at 35 miles long, and it took 17 years to build.
But Vesterbacka’s all in
According to Buzzfeed, he’s even learned Mandarin to properly broker a deal with potential Chinese backers, explaining, “if you are going to ask them for 15B euros, it would be polite to do it in their own language.”
With his tunnel, he hopes to turn Helsinki and Tallinn into some kind of mega-metropolitan-twin city he calls the “FinEst Bay Area.” A Nordic Silicon Valley of sorts, only “without its huge housing problems,” he assures.
“But i’ll always be with you, right here,” he said, touching his successor, President of Domino’s International Richard Allison, on the heart before flying into the stars like Christopher Lloyd in Angels in the Outfield -- at least that’s how we’d like to imagine it went down.
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