Moody’s Estimates Apple Saving up to $9.2B from Bond sale

Posted by at 3:22 pm on May 3, 2013

Apple’s $17 billion bond sale — meant to help finance a $55 billion stock buyback, part of a plan to return $100 billion to shareholders by 2015 — is saving the company about $9.2 billion in taxes, according to an estimate from Moody’s Investment Services. Had Apple decided to use repatriated foreign cash, it would have paid a 35 percent tax rate, and hence owed the US about $9.2 billion.

The company will still have to pay roughly $308 million per year interest for its bond offering, but that interest is tax-deductible, which should lower the real cost by about $100 million per year. Spokesman Steve Dowling comments that for its 2012 fiscal year, Apple paid about $6 billion in federal income taxes, which Dowling claims is 1 out of every 40 dollars in corporate income taxes the US government took in.

Apple has roughly $145 billion in cash reserves, but only $45 billion of that is situated in the US. The company has joined with other businesses in trying to pressure politicians for a “tax holiday,” which would temporarily lower the tax rate on repatriated cash. That option may be politically difficult, however, given the government’s budget crisis and public demands for fair taxation.

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