To CEO (About Tim Cook): Debate of the US Tax System

The debate of the US tax system has been in the public domain for some time now. The new tax system is meant to affect quite a number of economic sectors in th economy. One of those sectors is the corporate sector where the Aple company lies. The major sectors that will be affected through the tax proposed tax sytem include the corporate tax rate that will be reduced from 35% to 20%. This tax rate is favorable for the operations of the google company given the majority of the corporate companies in other parts of the world lie in the same 20% bracket. Secondly, the proposal is going to allow for immediate expensing of assets for at least five year, the deductibility for corporate interest expenses will be scaled backwards and also introduction of a territorial system that will see the implementation of a one-time repatriation tax on profits oversees. Further the plan removes tax for research and development and low-income housing.
The 10% repatriation tax holiday will benefit apple greatly. For instance instance the in 2016 the company had $216 billion oversees as by September 2016. With the new repatriation tax the company could have paid $21.6 billion in taxes. Compared to the current tax system of 35% the company could e saving $54 billion.
To fully benefit from the reapatriation of taxes the company will bring in its foreign investiments and utilize them domestically. The savings made from the reduced tax can help the company meet its current long term debts which stand at $73.5 billion. Another step to benefit from the repatriation tax is to buy back the company stock. Buying back the stock will boost the per share earnings and also create dividend savings for the company. With the proposed tax system the conmpnay will save $ 10.14 per share which will represent 7.7% of the companys current stock price. Repurchase of stock will be appropriate as there are higher dividends earned on the shares than the interest eraned on the cash held by the company.
The proposed tax system will benefit the company absed on the lower tax rates. However, its overall benefits may not be realized in the short term as it may be expected because in addition to the reduction of the taxes, the tax breaks have been withdrawn. The reducation of taxes in research and development will ensure that the company gets more financial resources to carry out research and develop the business further. This is very essential for google company which thrives in the woerld of tec...