Apple Says It Will 'Contribute' $350 Billion in the US Economy Over the Next 5 Years (cnbc.com) 164
Apple said on Wednesday it will invest $350 billion in the U.S. economy over the next five years, touting the creation of 20,000 new jobs and a new campus thanks, in part, to the prospect of tax reform. From a report: The company said it expects tax repatriation payments of about $38 billion, indicating that it will bring a portion of its $250 billion overseas cash back to the U.S. As of November, the company had $268.9 billion in cash, both domestically and overseas. The job creation will focus on direct employment, but also suppliers and its app business, which it had already planned to grow substantially. "We have a deep sense of responsibility to give back to our country and the people who help make our success possible," chief executive Tim Cook said in a statement.
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There are a few factors.
First there is the multiply by 12 rule. Where every dollar spent, will be Multiplied by 12 benefit to the economy.
So that brings it down to 1.46 Million per person being spent. Then this is over 5 years so we get 292 thousand a year. Roughly 1/3 spent goes to benefits outside of ones salary, so that bring $194 Thousand per year on average per employee in raw salary. Which is still on the high side, and I bet Apple is calculating some other bogus numbers such as community starting businesses such as restaurants and stores to accommodate these people.
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I think you forgot overhead. Aside from salary and benefits, it costs money to give an employee a desk and chair to sit in, a phone, a computer, people to manage the IT infrastructure, administer HR and payroll, run the AC and get the place cleaned, pay mortgage/rent/property tax on the building, and so on. Typically that can be anywhere from 50% to over 100% on top of an employee's salary.
That said, I still agree that the numbers appear to be suspiciously high.
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We ref'd to that as "labor and burden." We used a multiplier like 2.5 to determine the total. So if an employee was paid 40k a year, labor and burden put their total cost as 100k. The multiplier would change depending on area of operation.
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A big part of the projected/promised economic activity is from domestic manufacturing of their devices in the near future. Something Steve Jobs said would never happen.
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"There are a few factors."
There's only one.
Trump allows them to pay only 8% taxes on the hundreds of billions they bunkered offshore and they'll distribute that as tax-free dividends to their shareholders.
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They will pay 8% on $35BN in previously generated profits, that's a one-time tax bill of what, almost $2.5BN this year, on top of this year's regular tax obligations.
Before you get all worked up over paying 'only' 8% taxes, ask yourself what is the actual rate you pay? Half of filers make no net income tax payment, their refunds and credits ensure the gov't pays them, not the other way around. But let's say you are among the 75M tax filers that actually pay income taxes, try a little exercise and take the t
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"When did dividends become 'tax-free'?" He asked the fellow that never collected a dividend in his life...
And they are repatriating $35BN, the rest is 'economic activity, like domestic manufacturing.
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You have to learn how to decode corporate-speak. For example, when a company says that the tax cut saving will go to a bonus, what will actually happen is that amount will be subtracted from people's total compensation. The $2500, or
Re: per person (Score:2)
Because the only way Apple can 'contribute to the economy' is by directly creating jobs...
Perhaps they will build autonomous factorys and manufacture phones and laptops with minimal direct human involvement?
How about just paying their f*@king taxes? (Score:1)
You know, the ones they weaseled out of by pretending they're an Irish company?!? Yeah, they're now paying some of it to the E.U., but that's still B.S. for America.
Re:How about just paying their f*@king taxes? (Score:5, Insightful)
They were able to do that due to tax laws duly voted into existence by Congress. Or, by the unintended consequences of tax laws duly voted into existence by Congress.
Means, they did nothing illegal. As most companies who did similar things did nothing illegal.
The new Tax laws lesson the incentive to keep cash overseas. Add to that the Bully Pulpit effect and you have cash coming home and being taxed, albeit at a lower rate than if it were raised here. But to you want 30% of nothing or 10% of something?
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News for ya...most electronics manufactures are using overseas manufacturing. I bet the computer you are using to post here was at least in part built by some 12 year old working for 50 cents a day.
Do you expect Apple to put itself at an economic disadvantage compared to other companies?
Re:How about just paying their f*@king taxes? (Score:5, Interesting)
Who cares about "illegal"? This is Apple. They claim to be good global citizens. Meanwhile they are using slave labor to build their products and actively trying to avoid paying taxes. So they need to drop the whole SJW, good company act. Hypocrites.
Slave labor? People aren't forced to work at FoxConn. Surely work conditions suck, but that doesn't mean people are held by chains without pay. They get paid, substantially more than what they would make back at the village, and many actually see it as a opportunity to climb up (which they do) as opposed to the many people we have here that do nothing to learn new skills and keep dreaming about having those level-pulling 9-5 jobs that are forever gone.
These workers are actually not the poorest from their village. Educationally they are the cream top from Rural China, and go there to climb up, not to escape rampant poverty.
I suggest you read "Factory Girls: From Village to City in a Changing China" by Leslie T. Chang. Obviously we want those workers to have better conditions (which they are getting, incrementally). And there is no doubt there is injustice in the system (in particular sexism.)
But to call the slave workers is just idiotic, and it simply demeans the very workers that chose to try their luck in the factory lines.
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[citation needed] [nytimes.com]
Re: How about just paying their f*@king taxes? (Score:1)
There are other stories out there as well. Iâ(TM)m on an iPhone and donâ(TM)t feel like ducking around looking for the articles without search in page.
Foxconn historically was a means of providing dowries for girls abandoned by the parents. Like the old stories of unwanted children dropped at the church doorstep, China had a one child per family law which caused parents to drown their daughters in order to be allowed to have a second chance to get a son. The government responded by actively outlaw
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True, it's not slave labor, and I don't think we should necessarily complain that Apple gave Chinese people jobs. A human is a human afterall. What we should complain about is that Apple got away with paying their laborers pennies in the Chinese labor market while simultaneously raising the prices of their products in the US. In other words, they used cheap labor to drive their profits through the roof. On top of this, they used tax tricks to get out of paying their fair share back into the US economy.
I
Actually they are (Score:2)
I don't think we really want them to have better conditions either. I don't think we want them to be worse either, if by 'We' you mean consumers in first world nations. We're largely indifferent.
But as for their working conditions, there's no shortages of less than uplifting stories about them. [bloomberg.com] Also, these are masses of Factory workers. They're primed for Unionization but they never seem to do much of
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The company owns the housing and the food. They set the prices to make sure that people can't make enough to do anything except survive. If it isn't slave labor by name it is in practice.
People can quit (and many times they do, they go "fuck it, I'm going back home"). So, no, it's not slavery.
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If only it was like that. In reality many of those people are desperate, they are extremely poor and Foxconn is one of the few reliable sources of income available. Their family probably still grows it own food just to survive. Things like health insurance are unheard of.
This creates immense pressure on those workers. If they quit then it cuts off a vital source of income for their families.
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If only it was like that. In reality many of those people are desperate, they are extremely poor and Foxconn is one of the few reliable sources of income available. Their family probably still grows it own food just to survive. Things like health insurance are unheard of.
This creates immense pressure on those workers. If they quit then it cuts off a vital source of income for their families.
No, it is not. Talk to Chinese people. Or I would take my own experience growing up in a very poor country. The people going to work at Foxconn aren't escaping survival conditions. They are escaping lack of opportunities. Having grown up seeing those two, I can tell you they are not the same.
Believe me. Or not. It's all the same.
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There is a difference though. Tax exemptions on personal income is usually the result of spending money locally; effectively investing in the local economy. When you donate money to a church, or have a mortgage on a house, the money you spent is effectively circulated back into the economy. In Apple's case, they used tax *loopholes* to hold their profits overseas; neither paying taxes, nor investing the money back into the economy. The local (US) economy (including public entities/programs) invested sub
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Stocks and bond investments don't result in a full transfer of wealth back into the economy. If it did, then the value of their investments would go to zero with the balance of those investments getting recirculated back into the economy. Instead, what likely happened is that they invested in companies that were safe and successful, and with the soaring stock market they made even more money. Government bonds are typically safe. I'm sure governments used it, but now Apple will be cashing them out with i
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Cut the unhelpful "slave labor" hyperbole. There is actual, real slave labor still going on today, but so far as we know Apple is not involved with it in any way.
While situations certainly aren't ideal in the countries where much of Apple's manufacturing takes place, those problems pre-date Apple's existence as a company and go far beyond Apple's influence in the global community, so you can't expect them or any other individual organization to fix the issues instantly. Apple, among many others, seems to ha
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Who cares about "illegal"? This is Apple. They claim to be good global citizens.
Do you claim to be a good citizen? Do you take any legal tax deduction you can?
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solution: set corporate tax to 0%. increase income tax on top bracket (who are the ones who own, and receive profit from the companies). This will shift the problem from corporate tax shelters being abused to personal tax shelters being abused.... but the difference is people can go to jail for breaking the law. Also, it will make America more attractive location for business.
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What mindless drivel. Corporations also use infrastructure and other things provided by the state so they have to pay for it.
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I know. I live in a tax haven too (the Netherlands). It's not fair to squeeze all taxes out of the working population and give companies the freedom to do as they like without it having any consequences dor them.
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The market sets the price of goods. Tax rates may have an impact, but I'm doubtful that it's a 1-for-1 impact. If tax rates go up and Apple tries to raise the price of that $900 iPhone to $1000, then fewer people may buy the $1000 iPhone; requiring Apple to either lower their price back to $900 and take a lower margin on the sale, or sell less phones.
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solution: set corporate tax to 0%. increase income tax on top bracket (who are the ones who own, and receive profit from the companies). This will shift the problem from corporate tax shelters being abused to personal tax shelters being abused.... but the difference is people can go to jail for breaking the law. Also, it will make America more attractive location for business.
I'm pretty left-of-center (actual, global center, not what most of America calls "center"), and I would fully support this idea. I would also add, though, getting rid of loopholes that allow executives to have $0 personal income (e.g. the company paying all of their personal expenses like food and travel).
They are paying the taxes, that is the point (Score:3)
A large sum of money is going to be re-patriety now that the tax law makes more sense and is in line with other countries... Apple is going to be paying hundreds of millions of dollars in U.S. taxes bringing money back to the U.S.
Just where did you think this money was coming from anyway?
Two corrections - 38 *billion* in taxes (Score:4, Informative)
The first correction - "re-patrriety" (whatever the hell that is) should be "re-patriated".
Secondly, that re-patriation will cause Apple to pay a one-time payment of 38 BILLION [wsj.com] dollars in taxes to the U.S. Is that enough to slate your dramatic thirst for Apple's cash?
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You know what other countries do as well? They have low corporate tax rates and high personal tax rates. Many European countries have tax rates of 50% on personal income.
If we're going to go "in line with other countries", it only seems right to go whole hog and crank up the personal tax rates as well.
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Anyone is welcome to add as much extra tax as they like. Have you personally contributed extra in your life a tall, much less a total of 50%? No? HMM.
Just because someone sets fire to their leg doesn't mean I plan to follow. Apparently haver low corporate rates AND low personal rates is the best idea since we flourish while they languish.
Re:They are paying the taxes, that is the point (Score:5, Insightful)
False. Europe is flourishing despite having high personal tax rates. Lower debt, higher standard of living. European countries are consistently ranked at the top in worldwide surveys for quality of life and happiness in general, not to mention education. Guess where the U.S. ranks in those categories? Like broadband, not even in the top 10 of the world.
As to the canard of paying more than one has to for taxes, look at Mississippi and Alabama for what happens when people think paying taxes is wrong. Talk about shitholes.
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and is in line with other countries You know what other countries do as well? They have low corporate tax rates and high personal tax rates.
And they don't tax overseas earnings at all.
If we're going to go "in line with other countries", it only seems right to go whole hog and crank up the personal tax rates as well.
I agree with that. We should abolish corporate taxes entirely and instead fund the government with individual taxes -- including a healthy capital gains tax rate. The reason is that corporations never actually pay taxes anyway; the money always comes from some mixture of investors, employees and customers. Better to tax those people directly rather than trying to hide it by pretending to tax the corporation. Then the legislature can make sure that the tax burden i
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Ah, remember the heady days of 2007 going into 2008?
Dow at 14000, hurrah! Bush's policies are amazing. America will boom.... oh, shit, hello 2008 banking crisis economic collapse permanent bailout economy...
No real improvement???? (Score:2)
Stocks blasting upwards despite no real improvement in overall business for most companies
How is a drop in corporate taxes from 35 to 21% not a VAST improvement in every business in the US? I mean, without any changes products that were marginal in profitability are suddenly wildly profitable. Who knows what kind of new businesses are now possible that would not have been possible with that kind of tax overhead. That is a huge improvement which is why the stock market is rocketing.
Not going to argue with
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Sigh, yet another non-businessman to school (Score:3)
If a project costs 1 billion but generates 11 billion revenue, now the company gets to keep 79% instead of 65%
Yes that is correct, taxes are taxes on profits.
If that project generated 1 billion in revenue they could still keep 0 profit.
Yes that is also correct, etc.
The result is that ZERO new business opportunities are now profitable.
That's pretty speedy! Correct to utterly wrong in under a second.
Keeping more of profit they do earn means a company has more income to spend on R&D for new product. Tha
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http://www.economicsdiscussion... [economicsdiscussion.net]
"This tax takes the form of a percentage on the net profit of the firm. The effects of a profits tax are the same with those of a lump-sum tax. The profits tax, while reducing the profits (by adding to the cash expenses of the firm), will not affect its MC. Hence in the short run the equilibrium of the firm and the industry will not change. However, in the long run,
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You're missing the part where the risk-adjusted returns on investment need to be higher than alternative potential returns in order to attract money for an investment.
Instead of putting your money into a company where 99% of whatever you make will be taxed away, you'd put it into a company in another country doing something else, or invest it in municipal bonds, or loan it to the FED, or keep it in cash (because there is otherwise a risk you will lose your investment instead of making money on it), or just
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Labor indicators are much more volatile than others, but the signals are highly mixed because of major contrarian macro-economic things the Fed undertook post 2008 - QE, QE2, QE ad-infinadum. This is a little like the S&L bust in the mid 80s but in reverse. Instead of a giant drain on available cash & capital for large businesses, instead we've essentially hollowed out the entire capital market for the small businesses. As the Fed increased QE to pump in "liquidity" it was making sole proprietersh
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Other way champ (Score:3, Informative)
Initial unemployment claims are starting to tick up. Leading indicator.
Actually unemployment claims are at a 44 year low [washingtonexaminer.com]...
As you say - leading indicator.
I'm not upset. I'm actually rooting for a repeat of 2001 and 2008. Nothing nicer than buying a Trumpkin's home at auction
You mean the ones that bought stock after Trump got elected and are living the good life now? Yeah I guess they might be selling the house for a hefty profit and move into something larger, probably not at Christies though... not that
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not that you could afford anything a Trump supporter would deign to sell you.
You seem to suggest here that Trump supporters own the expensive properties?
I'm just going to put this here.... (20 to 1 ratio of Billionaire donors to Clinton campaign)
https://www.bloomberg.com/news... [bloomberg.com]
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He who shall not be named... (Score:5, Insightful)
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You think either McConnell or Ryan have seen a W-2 in person? All these guys employ other guys who deal with dirty little stuff like W-2s and tell them what laws need to be changed to make them even more millions.
(actually, I should have said "needed to be changed" - they just gave themselves a huge payout a few weeks ago)
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AT&T and Walmart followed up with LAYOFFS (Score:5, Informative)
Thursday morning, Walmart had a flashy announcement: Thanks to corporate tax cuts, it was giving its employees bonuses of up to $1,000. Walmart and President Trump pointed to the announcement as proof that the corporate tax cuts are really a boon to working-class Americans.
This announcement, as ThinkProgress reported earlier, was much more complicated than it first sounds.
Walmart employees are eligible for the $1,000 bonus only if theyâ(TM)ve worked at the company for 20 years. Most Walmart employees, of course, havenâ(TM)t worked there that long. Those employees will receive a smaller bonus based on seniority. Walmart didnâ(TM)t explain exactly how the sliding scale will work, but said the total value of the bonuses will be $400 million. Walmart has about 2.1 million employees, which works out to be an average bonus of about $190.
The one-time bonus Walmart announced this morning amounts to just over 2 percent of the total value of the tax cut to the company.
In fiscal year 2017, Walmart had pre-tax profits of about $20.5 billion and paid an effective federal tax rate of around 30 percent. With a new corporate tax rate of 21 percent, the corporate tax cut is worth at least $1.85 billion to Walmart every year. Since this cut is permanent, the true benefits to Walmart will grow much larger over time. But itâ(TM)s safe to say that, over 10 years, this corporate tax cut will be worth over $18 billion to Walmart.
But now it appears the announcement was timed carefully to cover for thousands of unannounced layoffs.
Business Insider reports that today, Walmart is abruptly closing numerous Samâ(TM)s Clubs stores across the United States. In some cases âoeemployees were not informed of the closures prior to showing up to work on Thursdayâ and âoelearned that their store would be closing when they found the storeâ(TM)s doors locked and a notice announcing the closure.â
citation provided [thinkprogress.org]
Bingo. (Score:2, Informative)
Bingo.
The $1000 bonuses will go to top Walmart brass...
Meanwhile, on page 20, Walmart closed a bunch of Sam's Club stores and laid off their entire staff.
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The $1000 bonuses only go to workers with 20 years' service. Look it up -- MULTIPLE sources say the same thing.
OK, I looked it up. [washingtonpost.com] The retail giant said the pay raises would take effect Feb. 17 and the bonuses paid sometime after this month. It also plans to give one-time cash bonuses to some part-time and full-time workers, ranging from $200 (for workers who have been at Walmart for less than two years) to $1,000 (for those who have been working there for 20 or more years).
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Correction (Score:1)
Apple Executives will receive $349 billion over the next 5 years. A small percentage of that will be used to buy US made goods and services; the rest invested around the world.
doh (Score:2)
Yesterday we saw Apple fanbois bemoan the "Apple Shaming Society" [slashdot.org] when a story appeared about the shameful working conditions at less visible suppliers in China. Today, however, the fanbois will find very little to like about this news; validating Trumpanzian tax policy is not what they want to see from their gadget god.
Not at all.
Not at all (Score:3)
I think you overlook those who view Trump, the tax law, and Apple all as positive things. It's way more people than you might think...
Android and Apple devices are so widespread I don't think you can derive much political leanings from them.
Simple math (Score:2)
20,000 jobs is pretty skinny for 350 billion "contributed" to the economy.
Even if all 20,000 of those people are paid $100,000/year, their pay would be only 2 of the 350 billion, or just over half of 1%.
A lot of money will be going somewhere, but probably not to workers.
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It's a little more complicated though:
The $350B is over 5 years, so assuming the same $100k base salary/person/year that's $10B.
Also, the "fully loaded cost" of an employee is often 2x base salary once benefits (health insurance, retirement, etc...), bonus, overhead (rent, equipment) are taken into account. So the cost to Apple for those 20,000 employees is likely around $20B total.
That's about 5.7%, not an insignificant amount, either in dollar or as fraction of the total spend. Of course, folks are free t
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All about security. The is a growing push for local tech production in all infrastructure areas, as a matter of state security. Source tech from another country and make no mistake that country owns your digital future, they can switch you off, dangerous stuff. With that push, so more countries will locally tech develop or set up trusted security partnerships with other countries (anyone who trust the US is a bloody idiot and the US has most emphatically proved that over the last couple of decades, absolute
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20,000 jobs is pretty skinny for 350 billion "contributed" to the economy.
Even if all 20,000 of those people are paid $100,000/year, their pay would be only 2 of the 350 billion, or just over half of 1%.
A lot of money will be going somewhere, but probably not to workers.
In other words, worker salaries are a small part of the investment. Who'd have thought a semiconductor company has expenses other than salaries? Also, you forgot "over the next 5 years" in your maths.
Meaningless (Score:5, Insightful)
Companies have been re-branding existing expansions as the result of Dear Leader since election day.
Why should I now believe this expansion happened because of Trump or the tax law? It's not like Apple was previously short of cash or didn't need to expand their workforce.
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Read Tim Cook's past statements about not bringing the money back to the US at the existing 35% tax rate. It's well documented. He said he would only bring it home when the tax laws were changed to be more favorable to business in the US.
If you haven't figured it out already... higher taxes = money leaves to find a lower tax location. Pay attention!
I've no doubt Apple's decision to bring the money into the US had to do with the tax law (whether that law was the best decision is debatable, you might have gotten a lot more than $38 billion with another law).
What I contest is that the expansion was a result of the tax law or something they would have done anyway. Apple was not short of cash before this.
Swami Anderson places his clenched fist... (Score:5, Insightful)
... upon his turban and predicts:
Swami Anderson knows all, tells all
Tax (Score:2)
Ah, they will start paying taxes!
Inflation? (Score:2)
With all that money coming home to roost due to tax "reform," won't the burgeoning money supply lead to rapid inflation? Or is there something I'm overlooking?
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If the Fed does as expected and raises interest rates 3 times this year, you'll see a net outflow of capital from the stock market (and hello special dividends to keep investors holding share prices up a little longer) and into long term items like T-bills and higher rate commercial paper. Realistically the US economy needs this cash right now to help sop up all of the QE that was done post 2008 to create "artificial" liquidity in the market just as that fed created liquidity needs to disappear to restore a
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With all that money coming home to roost due to tax "reform," won't the burgeoning money supply lead to rapid inflation? Or is there something I'm overlooking?
350 billion over 5 years is a drop in the bucket. GDP is ~18T/y. 350B/5y=70B/y. 70/18,000 = 0.389%. Is this enough to move the needle? Probably not in any significant or detectable way by itself.
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Where was that "deep commitment" while they (Score:2)
were amassing all that money overseas?
This is like the airlines periodically announcing they are increasing space between seats because "they care about passenger comfort". Where was the concern for passenger comfort while they were making the spacing narrower?
SOS, different day...
Excellent News There (Score:1)
Apple bringing back some of their $$$ is a start, at least....
Ferret
Better than in the government's pocket (Score:2)
Clearly, the potential for tax dollars getting pissed away is very high. Depending on which side of the political fence you're on, money gets pissed away on lousy emergency management software, poorly trained personnel, and passwords written on Post-It notes OR you get a wall. People should be happy that Apple is spending it instead of a government.
Not really overseas (Score:2)
When they say the money was kept "overseas" and now they're "bringing it to the US", that doesn't mean what you think it does. In fact that "overseas" money was being kept in bank accounts in New York [businessinsider.com] and managed by an Apple subsidiary in Reno. It's only "overseas" in a completely fictional sense invented by accountants. No new money is going to be entering the US. There won't be any investment boom. The money's already here and they've already been investing it. Now congress has given them a huge tax