Investments can’t be expensed for tax purposes. If they repatriate $200B, they owe the state of CA roughly $20B and the US $63B in income taxes, no matter what they invest it in.
They could invest in hiring tons of employees and their salaries would be expenses (mostly future expenses) l. But that’s no free ride, those employees need to increase sales to cover their costs or the money is wasted. If my business makes $1M this year and i pay a contractor $1M so I don’t owe taxes this year, that contractor better build something worth more than a million or it was s huge waste. Losing $1M to save $350K is really bad business.
Imagine if the contractors project sold for $900k next year. Great, you deferred taxes a year, but still owe $315K on the contractor sale next year, and you lost $100k. Net loss $65,000. Dumb, dumb dumb.
What Apple would actually do if it repatriated the $200B is
a) pay the $80B in state/federal taxes,
b) pay $117B in dividends, so its shareholders would have to pay at least $20B in state/federal dividend taxes, for a total tax of around $100B. But it’s worse than that.
Remember, the $200B is only what’s left after paying about $25B in income taxes to foreign governments. Your company earns $225B, and can only pay about 45% to you, and 55% ends up going to various taxes (note we ignored VAT/Excise/Payroll taxes too).
Now do you understand why Apple doesn’t repatriate?
They could invest in hiring tons of employees and their salaries would be expenses (mostly future expenses) l. But that’s no free ride, those employees need to increase sales to cover their costs or the money is wasted. If my business makes $1M this year and i pay a contractor $1M so I don’t owe taxes this year, that contractor better build something worth more than a million or it was s huge waste. Losing $1M to save $350K is really bad business.
Imagine if the contractors project sold for $900k next year. Great, you deferred taxes a year, but still owe $315K on the contractor sale next year, and you lost $100k. Net loss $65,000. Dumb, dumb dumb.
What Apple would actually do if it repatriated the $200B is
a) pay the $80B in state/federal taxes, b) pay $117B in dividends, so its shareholders would have to pay at least $20B in state/federal dividend taxes, for a total tax of around $100B. But it’s worse than that.
Remember, the $200B is only what’s left after paying about $25B in income taxes to foreign governments. Your company earns $225B, and can only pay about 45% to you, and 55% ends up going to various taxes (note we ignored VAT/Excise/Payroll taxes too).
Now do you understand why Apple doesn’t repatriate?