The recent cut in the U.S. corporate tax from 35 to 21 percent has favored many companies to enhance their profitability and attract investments in the country. This announcement would help various sectors including automobile, manufacturing, technology, and others to introduce new plans. The U.S. President Donald Trump took this step to bolster its economy by encouraging more investments in the country along with reducing the rate of unemployment. Companies have begun planning and strategizing to make optimum of this new tax regulation. It seems that Trump’s plans have come to fruition. The U.S. tech giant announced its plans to invest $350 billion in the U.S. in the next five years. This investment would also result in creation of new jobs. Moreover, it planned to build a new campus in the country.
The recently announced vast investment by Apple does not include tax payment, or tax generated from sale of company’s products or employee wages. However, it includes taxes on repatriation of cash reserves of the firm, which are nearly $256 billion. It estimated that nearly $38 billion will be invested from repatriation taxes.
The Cupertino-based tech firm Apple will invest $30 billion to build a new campus in the country. The initial plan is to build a customer support center. The location has not announced yet. But the company confirmed that the plant will run on renewable energy sources. Moreover, it will invest $10 billion to build new data centers, which will be addition to its seven centers. The tech firm increases its advance manufacturing fund from $1 to $5 billion. The aim to increase funds is to generate new manufacturing jobs in the country. It funded projects in rural Texas and Kentucky. The firm will extend coding initiatives by helping students and teachers at K-12 and other community colleges to encourage people learn coding skills.
The announcement seemed to impress the President. He twitted his response to the announcement.
“I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States. Great to see Apple follow through as a result of TAX CUTS,” Trump wrote on Twitter, describing it as a victory for his efforts on tax cuts.
While asked if the announcement of new investment and job creation were linked to the Republican tax plan, Tim Cook, Apple Chief Executive Officer, told ABC News, “Let me be clear: There are large parts of this that are a result of the tax reform, and there’s large parts of this we would have done in any situation.”
James Cordwell, Research Analyst at Atlantic Equities outlined that the U.S. investment plan of Apple could help the company to maximize the profitability and provide more cash to shareholders. Cordwell said, “Being seen to just hand the cash back to shareholders could spark some political sensitivities.” He added that the announcement could be part of the company’s efforts to manage this issue.
This new staggering investment is aimed will help make an international market and consolidate its position in the fiercely competitive tech industry. It is interesting to see how this new investment would fill Apple’s pockets and help the U.S. economy to grow.