Two U.S. senators have sponsored a bill that would make it easier for companies like Apple to bring the cash they are keeping overseas into the United States. Currently, U.S. companies that repatriate their foreign earnings are taxed at 35%. The new bill, sponsored by Senators Barbara Boxer and Rand Paul, is called the Invest in Transportation Act of 2015 and would see these companies taxed at a much lower rate, according to the announcement:
Allows companies to voluntarily return their foreign earnings to the United States at a tax rate of 6.5 percent. The rate is only for repatriations that exceed each company's average repatriations in recent years, and funds must have been earned in 2015 or earlier. Companies have up to five years to complete the transfer.
The taxes collected from these earnings would go towards the Highway Trust Fund, which funds the repair and maintenance of U.S. highways. The bill will also stipulate that repatriated money need to go towards things like increased hiring, research and development, and more:
Ensures that a portion of repatriated funds will be used for increased hiring, wages and pensions; R&D; environmental improvements; public-private partnerships; capital improvements; and acquisitions. No funds may be spent on increases in executive compensation, or on increases in shareholder dividends or stock buybacks for three years after the program ends.
Apple has come under fire for their foreign tax practices in the past. The question here is: would this change be enough for Apple to bring their cash home? There is also a question as to whether the bill will even pass, as it is already facing opposition from both Republicans and Democrats in the Senate.
Source: Senator Barbra Boxer, Bloomberg
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