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If Trump's new tax policy on US corporations can impose an immediate tax levy of 20% on these .5T of earnings retained offshore, then that would create a short term tax windfall of 0B. One of the best examples of this phenomenon is Apple (AAPL-US), a company that (according to FactSet’s GeoRev data) currently derives over 60% of its revenue outside the U.S. As of the company’s latest annual report (data for September 30, 2017), Apple had accumulated 8.9 billion in cash and marketable securities on its balance sheet. Of that, 2.8 billion is strategically stashed offshore, representing billions in tax savings. As seen in the chart below, as foreign sales have increased, so has the cash balance held by Apple. Apple is not alone. Current estimates put the aggregate balance of
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If Trump's new tax policy on US corporations can impose an immediate tax levy of 20% on these .5T of earnings retained offshore, then that would create a short term tax windfall of 0B. One of the best examples of this phenomenon is Apple (AAPL-US), a company that (according to FactSet’s GeoRev data) currently derives over 60% of its revenue outside the U.S. As of the company’s latest annual report (data for September 30, 2017), Apple had accumulated 8.9 billion in cash and marketable securities on its balance sheet. Of that, 2.8 billion is strategically stashed offshore, representing billions in tax savings. As seen in the chart below, as foreign sales have increased, so has the cash balance held by Apple. Apple is not alone. Current estimates put the aggregate balance of
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If Trump's new tax policy on US corporations can impose an immediate tax levy of 20% on these $2.5T of earnings retained offshore, then that would create a short term tax windfall of $500B.
One of the best examples of this phenomenon is Apple (AAPL-US), a company that (according to FactSet’s GeoRev data) currently derives over 60% of its revenue outside the U.S. As of the company’s latest annual report (data for September 30, 2017), Apple had accumulated $268.9 billion in cash and marketable securities on its balance sheet. Of that, $252.8 billion is strategically stashed offshore, representing billions in tax savings. As seen in the chart below, as foreign sales have increased, so has the cash balance held by Apple.
Apple is not alone. Current estimates put the aggregate balance of cash held overseas by U.S. companies, with the purpose of tax avoidance, at $2.5 trillion.
This coupled with a current accounting of near $300B of "extraordinary measures" available to Treasury operating at "debt ceiling!" might provide Trump with an $800B war chest (effectively) in his TGA.
If the ongoing fiscal deficit fell to perhaps $30B/month due to removal of the current incentive for multinationals to save/hoard USD offshore in order to avoid taxes; Trump could perhaps operate for 26 months without Congress having to raise the debt ceiling.
What a #tax cut on repatriated foreign earnings could mean for investors: https://t.co/7hIvRwdFfY pic.twitter.com/1dYeeHe7xH— FactSet (@FactSet) December 19, 2017