Apple cites tax law in massive development plan

Iowa won't say if it will vie for more Apple facilities

(File photo) “Data centers like this new facility are critical to Apple’s operations and they make up the backbone of America’s innovation infrastructure,” Apple CEO Tim Cook says during the announcement ceremony in Des Moines on Thursday, Aug. 24, 2017. Gov. Kim Reynolds listens to his remarks. The company announced Wednesday a plan to bring back billions in overseas profits and develop more facilities like the data center planned for Waukee. (Rod Boshart/The Gazette)
(File photo) “Data centers like this new facility are critical to Apple’s operations and they make up the backbone of America’s innovation infrastructure,” Apple CEO Tim Cook says during the announcement ceremony in Des Moines on Thursday, Aug. 24, 2017. Gov. Kim Reynolds listens to his remarks. The company announced Wednesday a plan to bring back billions in overseas profits and develop more facilities like the data center planned for Waukee. (Rod Boshart/The Gazette)

Apple, the world’s most valuable company that for years has faced criticism for stashing billions in profits overseas, announced a plan Wednesday to repatriate most of it, spend $350 billion in development and create 20,000 jobs in the United States in the next five years, citing the newly passed corporate-friendly tax law.

Apple said that as required by the new law, it will pay $38 billion in taxes from its massive cash holdings overseas. That indicates Apple is returning around $245 billion cash to the United States, close to the $252 billion it cited in its most recent earnings report.

The payment is so far the largest announced from the tax changes Congress passed and President Donald Trump signed into law late last year, experts said.

“On the one hand, this is a record payment. On the other hand, it shows how successful they’ve been at gaming the system” around the world, said Edward Kleinbard, a law professor at the University of Southern California.

Apple for years has faced scrutiny around the world for its tax policies and for making so many of its products — like the iPhone and iPad — in China. Apple has lobbied for the United States to ease tax rates on foreign profits brought back to the country, saying such changes would allow it to invest more freely.

“We believe deeply in the power of American ingenuity, and we are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” said Apple chief executive Tim Cook in a statement. “We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”

In addition to the tax payment, Apple said over the next few years it will significantly add to the 84,000 employees it currently has in the United States. The new jobs will come from hiring at Apple’s current locations and from a new campus focused on technical support for customers.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Apple will announce its location later this year. It also said it plans to build several new data centers in the United States, including previously announced projects like in Iowa.

Last year, Apple announced plans to build a nearly $1.4 billion data center on about 200 acres in Waukee, a city west of Des Moines.

The state and city awarded the company a combined $213 million in tax incentives. In exchange, Apple agreed to create a minimum of 50 jobs at the data center. The center is expected to be complete by 2020.

A spokeswoman for the Iowa Economic Development Authority would not say Wednesday whether the state will vie for more Apple facilities, such as its customer support campus.

“It is our policy not to discuss details regarding projects with which we are negotiating, or even if we are negotiating with a particular company or project,” the authority said in a statement.

Overall, Apple will spend $10 billion on building data centers, as part of a $30 billion investment in capital expenditures.

The company did not say how much of the investments announced Wednesday and tied to the tax law had already been in the works.

The company has in recent years focused on building more U.S. facilities, and is increasing the size of a manufacturing fund from $1 billion to $5 billion to support its network of suppliers. Further investment will go to education initiatives.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Thank you for signing up for our e-newsletter!

You should start receiving the e-newsletters within a couple days.

Though Cook and Trump have disagreed on issues such as immigration, the announcement represents a major win for the White House.

“Just as the president promised, making our businesses more competitive internationally is translating directly into benefits for the American worker, through increased wages, better benefits and new jobs,” said Lindsay Walters, a White House deputy press secretary.

Since Trump announced he’d run for president, corporations have gone out of their way to underscore how his policies would benefited the country.

At times, that has backfired. More than a year ago, Trump appeared at a Carrier plant in Indianapolis vowing to save jobs from fleeing to Mexico. Despite state tax breaks aimed at keeping the factory open, 200 workers at the plant lost their jobs this month.

The Washington Post, the Los Angeles Times and Matthew Patane from The Gazette contributed to this report.

CONTINUE READING

MORE Business ARTICLES TO READ NEXT ...

CEDAR RAPIDS - A local businessman wants tear down six structures on First Avenue SE near Coe College to make way for a row of new retail storefronts. Other than China Inn, 1435 First Ave. SE, which remains open, the structures on ...

A little over a year into the Trump administration, the airline industry has mixed feelings about the businessman-turned-president.Three of the country's biggest airlines - United, Delta and American - and their labor unions prais ...

Give us feedback

Have you found an error or omission in our reporting? Tell us here.

Do you have a story idea we should look into? Tell us here.