Apple has long been criticized for legally storing much of its cash reserves overseas to avoid paying U.S. taxes. Those dollars could finally arrive stateside, thanks to a one time tax break, according to Reuters.
Top Senate Democrats and Republicans on Tuesday said they are considering offering American companies a way to repatriate profits stashed abroad. The senators believe such a move would generate a windfall in revenue that could be used to fund federal transportation projects.
The tax “holiday” idea “enjoys a good deal of support in our conference,” according to U.S. Senate Minority Leader Mitch McConnell.
“Nothing has been agreed to. Nothing has been ruled out,” said Ron Wyden, the Democratic chairman of the Senate Finance Committee.
The plan being discussed would give companies a one-time reduction in the amount of taxes they pay on profits earned abroad. These taxes could then help fund the federal Highway Trust Fund, used for construction and repair projects.
The fund is expected to run out of money by August.
Under current law, U.S. companies don’t have to pay the 35 percent corporate income tax on most overseas profits until they return to the United States. Many, including Apple, have chosen to park earnings in low-tax countries.
In March, Bloomberg reported that the largest U.S.-based companies added $206 billion to their stockpiles of offshore profits in 2013. The multinational companies have accumulated $1.95 trillion outside the U.S., up 11.8 percent year over year.
Apple has $54.4 billion parked overseas, and out of the reach of the Internal Revenue Service.
In 2004, Congress enacted a repatriation holiday that allowed U.S. companies to bring foreign profits home at a 5.25 percent tax rate. The latest plan would see the special low tax rate revived, “but with certain caps on interest deductions that would help raise revenue, a Republican tax lobbyist told Reuters on Tuesday.”
Personally, this sounds like a sweetheart deal for the folks in Cupertino, California. Still, I’m not convinced President Obama would sign this type of legislation. Besides, does anyone honestly believe Congress could get something like this done before August?
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