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Apple banks on tax break to build second corporate campus, hire 20,000

SAN FRANCISCO (AP)  Apple is planning to build a new corporate campus and hire 20,000 U.S. workers in an expansion driven in part by a tax cut that will enable the iPhone maker to bring an estimated $245 billion back to its home country.

The pledge announced Wednesday comes less than a month after Congress approved a sweeping overhaul of the U.S. tax code championed by President Donald Trump that will increase corporate profits.

Besides dramatically lowering the standard corporate tax rate, the reforms offer a one-time break on cash held overseas.

Apple plans to take advantage of that provision to bring back most of its roughly $252 billion in offshore cash, generating a tax bill of about $38 billion. That anticipated tax bill implies Apple intends to bring back about $245 billion of its overseas cash, based on the temporary tax rate of 15.5 percent on foreign profits.

Apple has earmarked about $75 billion of the money currently overseas to finance $350 billion in spending during the next five years. The spree will include the new campus, new data centers and other investments.

But most of the $350 billion reflects money that Apple planned to spend with its suppliers and manufacturers in the U.S. anyway, even if corporate taxes had remained at the old 35 percent rate.

Analysts have also predicted that most of those overseas profits will flow into stock buybacks and dividend payments. That's what happened the last time a one-time break on offshore profits was offered more than a decade ago.

The new law lowers the corporate tax rate to 21 percent on U.S. profits while providing a sharper discount on overseas cash this year.

Apple CEO Tim Cook is now delivering on a longtime promise to bring back most of the company's overseas cash if the taxes on the money were slashed.

Other U.S. companies, including American Airlines, AT&T and Comcast, have handed out $1,000 bonuses to all their workers to share the wealth they will gain from the lower rate on their domestic earnings. 

Excluding banks and other financial services companies, Moody's Investors Service estimates corporate America has an estimated $1.6 trillion in overseas cash. Most of that is in the technology industry, with Apple at the top of the heap.

Trump and lawmakers are hoping companies use the money to raise wages, expand payrolls, open more offices and invest in new equipment.

After plowing nearly $46 billion into dividends and stock repurchases in its last fiscal year, Apple is likely to funnel a big chunk of overseas money to its shareholders. But Wednesday's announcement was clearly designed to be a sign of its allegiance to the U.S., Apple's most lucrative market.

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