…Apple has announced that as a result o Trump’s new tax law they will repatriate $350 billion into the US economy over the next 5 years, $38 billion in repatriated taxes! In addition, their move will create 20,000 new jobs in the US!
Shouldn’t this be headline news? Trump’s tax plan is already saving billions! But then Trump would have to be credited – and the media just can’t seem to work up the courage to say anything ‘nice’.
This is the first of many more to come given the most assertive tax reform in decades. This could be the beginning of a wave as others see the advantages. Those with the highest amount of cash overseas include; GE, Microsoft, Pfizer, Merck, Google Medtronic and Abbott Labs. It is estimated that $1.4 trillion in corporate cash is being held in various overseas accounts subject to a one time offer of 15.5% tax rate. That would amount to a cash infusion of $217 billion not including the associated jobs, and payroll tax revenue, not does it take into account the additional profits subject on an annual basis to the new corporate rate of 21%.
It is proof positive that Trump’s plan is a success and could have a ‘Yuge’ positive impact on the US economy while simultaneously negatively effecting those economies where the havens currently exist; Switzerland, Cayman Islands, Bermuda, Ireland, Puerto Rico, and The Netherlands.
Another possible loophole that could trickle down and up again would include all the individuals, as in the Panama Paper Caper, who may decide to capitalize on the windfall and incorporate in order to bring their money back as well via the 15.5% rate.
Within this revolution of cash infusion there is a hidden danger. As the money flows and the economy is bumped, the Federal Reserve is likely to start increasing the interest rate which will ultimately put a bit of a squeeze on equity stocks given their profits have not kept pace with their market prices. However, in the short term, profits will feel the pace of business through lower tax rates and greater infusion of money in the economy.
A balance could shift toward larger cap stocks as they will see the greatest benefit and feel the least pain.
There is also the trigger of interest rates on federal debt which were cut in half during the Obama term. If those rates go back t normal, the government’s interest spending could easily double unless debt is paid down. Trump’s fault? Hardly. Simply a mechanism he inherited.
But playing the swings could be a bit dicey if you don’t understand all the inherent dominoes being deployed.
In the meantime, the Liberal media will have to do some double talking, fast talking, hype in order to somehow convey how all this money infusion isn’t really a result of Trump’s Tax Reform, but something completely anti-Trump.
Add to the Liberal negative news that the economy is roaring, unemployment is low, black employment is at an all time high, and the Ozone hole is actually shrinking all by it’s lonely self, and the world seems to have gone from doomsday Revelation to a Halleluiah scenario.