Apple (AAPL 0.51%) currently sits on over $132 billion in foreign cash. Fellow tech giants Microsoft (MSFT 0.46%) and Google (GOOG 1.43%) (GOOGL 1.42%) also have an awful lot parked abroad, but not as much. Microsoft has around $81 billion, while Google has $35 billion. That's almost a quarter of a trillion dollars between the three companies that won't be coming home anytime soon, with current repatriation tax rates of 35%.
Congress is considering another repatriation holiday, similar to the one in 2004. If another holiday is allowed, many companies could bring home some of those dollars. Apple and Microsoft have share repurchase programs that need to be funded with domestic cash, and share repurchases can help companies reduce their weighted average cost of capital, since the cost of equity is relatively high. Of course, lawmakers are more concerned with stimulating the U.S. economy through job creation and domestic investment.
Apple has been making headway on this front, though. The Mac maker recently built a large sapphire plant in Arizona with partner GT Advanced Technology, creating thousands of jobs. Apple also assembles its new Mac Pro at a facility in Austin, Texas. These are relatively small steps, but they're in the right direction. Congress grilled Tim Cook over Apple's tax practices last year, and Cook took the opportunity to push for broader tax reform.
In this segment of Tech Teardown, Erin Kennedy discusses tax repatriation with Evan Niu, CFA.
