Apple CEO Tim Cook is introduced during ceremony celebrating a new Apple warehouse on Wednesday, Jan. 17, 2018, in Reno, Nev. (Andy Barron/The Reno Gazette-Journal via AP)
RENO — Apple CEO Tim Cook joined Nevada Gov. Brian Sandoval and Reno Mayor Hillary Schieve at a groundbreaking for a new $4 million shipping and receiving warehouse in downtown Reno.
Wednesday’s ceremony came as the company announced plans to hire 20,000 workers and invest $350 billion in the U.S. economy over the next five years.
Cook said at the groundbreaking a few blocks east of the downtown casino district that “Apple is a success that could only have happened in America.”
He says the company has always felt a big sense of responsibility to give back to the country and the people who have made its success possible. He says they are pleased to be part of “transforming downtown Reno to the vibrant city it should be.”
Apple is planning to build another corporate campus and hire 20,000 workers during the next five years as part of a $350 billion commitment to the U.S. that will be partially financed by an upcoming windfall from the country’s new tax law.
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 being held overseas.
Apple plans to take advantage of that provision to bring back about $252 billion in offshore cash, generating a tax bill of roughly $38 billion. It’s something that Apple CEO Tim Cook promised the company would do if it could avoid being taxed at the 35 percent rate that had been in effect under the previous tax law.
About $75 billion of the $350 billion in U.S. investments will be paid from money that had been overseas, Apple estimated.
Companies who bring back money stashed overseas this year will be taxed at a 15.5 percent rate, below the new 21 percent rate for U.S. corporate profits under the new law. As a whole, corporate America has an estimated $2.6 trillion in overseas cash, with most of that concentrated in the technology industry, with Apple sitting at the top of the heap.
Analysts have been predicting that most of the overseas profits coming back to the U.S. would be plowed into paying shareholder dividends and buying back stock, something that happened the last time a one-time break on offshore profits was offered more than a decade ago.
While Apple is likely to return some of its overseas money to its shareholders, Wednesday’s announcement is designed to be a show of faith in the U.S. — the company’s largest market. The public show of support to the U.S. also helps the optics of a company that will still continue to make most of its iPhones, iPads and other gadgets in factories located in China and other faraway countries that offer cheaper labor.
Apple, which just spent an estimated $5 billion building a Cupertino, California, headquarters that resembles a giant spaceship, plans to announce the location of a second campus devoted to customer support later this year. The company didn’t say how big the second campus will be, or how many of the additional 20,000 workers that it plans to hire will be based there.
One thing is certain: Cities from across the U.S. will likely be offering Apple tax breaks and other incentives in an attempt to persuade the company to build its second campus in their towns.
That was what happened last year after Amazon announced it would build a second headquarters in North America to expand beyond its current Seattle home. The online retailer received 238 proposals from cities and regions in the U.S., Canada and Mexico. Amazon is expected to announce the winning bid later this year.