Apple has a bone to pick with the U.S. and its tax laws.
Apple's CFO Peter Oppenheimer slammed U.S. tax policy on overseas profits as part of a highly anticipated announcement Monday detailing Apple's plans to spend nearly half of the $100 billion in cash. He added that the company doesn’t have plans to repatriate any of its money parked overseas.
"Repatriating cash from overseas would result in significant tax consequences under U.S. law," Oppenheimer said on a conference call with analysts. "We have expressed our views to Congress and the administration. We think current tax laws provide significant disincentive to U.S. companies that would otherwise repatriate the significant cash they have on hand."
A coalition led by Apple, Google and other major technology companies last year hired an army of lobbyists to push for a tax holiday on their overseas profits, which total more than $1 trillion, according to a September Bloomberg report. Apple currently pays an international tax rate of less than 3 percent, according to data from Bernstein Research cited by the Wall Street Journal, while most large companies pay an international tax rate of between 13 and 25 percent.
If Apple ever did repatriate its foreign profits, the company would indeed have a big bill to pay: about two-thirds of the Apple's money is currently parked overseas, according to the WSJ.
Many major U.S.-based multinational corporations have pressed for a repatriation tax holiday in recent years, arguing that if they were given a tax break on the money they make overseas they would invest and create jobs back home. But the efficacy of that argument may be lacking. The Heritage Foundation, a conservative think tank, reversed its position on the repatriation tax holiday in October, saying it wouldn't spur U.S. investment or job growth.
Congress already tested the repatriation tax holiday in 2004, but it did little to create jobs, according to Treasury Department analysis. The report found the companies that reaped the most from the holiday actually cut jobs from 2005-2006 and used the money instead to buy back stock.
But a repatriation tax holiday isn't the only way big firms have managed to lower their tax bill in recent years. Thirty of America's most profitable corporations paid less than zero in income taxes in the last three years, according to a November report from the Citizens for Tax Justice. The top marginal corporate tax rate is 35 percent.
In one prominent example, Facebook structured its initial public offering such that it will avoid paying state and federal income taxes on its 2011 earnings, a November report from CTJ found.