The recent tax legislation reducing corporate income tax from 35% to 21% has begun priming the pump, big time. The most recent example is Apple, which announced that it is coughing up a $38-billion tax payment that reflects a one-time tax on overseas profits held in cash or other liquid assets at a 15.5% tax rate, a far cry from the old corporate levy. In trade, Apple will bring home almost $250 billion after tax which will enable the company to reward shareholders with share buybacks and dividends, but more importantly, to double-down on research and development, key to keeping Apple highly competitive.
I suspect with this treasure chest of repatriated cash, employees will also enjoy economic benefits, otherwise not available with cash sitting in some foreign land gathering dust. In just a few short weeks we are seeing the pump being primed on the corporate front. There is a lot to complain about with the new tax law, SALT and all, but the corporate tax reduction will provide significant economic incentives that will ripple throughout the economy.