Trump’s tax proposals could make Apple bring $200 billion in cash back to the US

Show me the money.
Show me the money.
Image: Reuters/Robert Galbraith
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Under the Trump administration, with Republicans in control of the White House and Congress, it is possible that the US sees its first significant comprehensive reform of the tax code since 1986.

US president Donald Trump has repeatedly promised significant tax cuts on the campaign trail. “Under my plan, I’ll be reducing taxes tremendously, from 35% to 15%for companies, small and big businesses,” Trump promised at the first presidential debate. “That’s going to be a job creator like we haven’t seen since Ronald Reagan. It’s going to be a beautiful thing to watch.”

There is also a new incentive for companies to repatriate cash being held overseas, as he is proposing a one-time “holiday” at a tax rate of 10% for corporate profits brought back to the US from abroad.

One American company in particular might have a lot to gain. Apple is currently holding $246 billion in cash, $230 billion of which is held in foreign subsidiaries. And according to an analysis by US bank Citigroup, seen by Business Insider, Apple would be expected to move most of its the cash held overseas back to the US.

“We see Apple as a significant beneficiary of Trump tax reforms,” said Citi analysts Jim Suva and Asiya Merchant. “Apple is very well positioned to benefit from potential tax reform of either or both a repatriation tax holiday and or a lower corporate tax rate.”

They predicted that a quarter of the $230 billion would be used to increase the company’s stock-buyback program, which would drive up earnings per share for Apple shareholders by 16%.

However, a Trump-led tax overhaul is far from certain because creating a political consensus on tax reform could prove even harder than overhauling healthcare, which recently failed to even get a vote in Congress. And the Republicans have yet to agree on a concrete plan.