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A Foolish Take: The Biggest Corporate Taxpayer in America

By John Maxfield – May 8, 2017 at 12:00PM

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Under Trump’s proposed tax cut, Apple would pay billions less in taxes each year.

There's a lot of talk right now about President Donald Trump's proposal to lower the top corporate income tax rate from 35% down to 15%.

This would be a boon to companies. It would make them more profitable and thereby encourage them to invest more aggressively in growth. It would also allow companies to return more capital to shareholders through dividends and stock buybacks, as the government would be getting a smaller piece of the pie.

Of course, some companies would benefit more from Trump's proposed tax cuts than others. Apple (AAPL 3.71%) ranks at the top. It earned $61 billion in pre-tax net income last year, remitting $15.7 billion, or 26%, to the government in the form of income taxes.

A bar chart showing how much Apple would have saved in 2016 under President Trump's proposed corporate income tax rate cut.

Data source: Apple 2016 10-K and author's calculations. Chart by author.

Under Trump's proposed 15% rate, Apple would have saved somewhere in the neighborhood of $6.5 billion last year. That's enough to buy 812.5 million "Make America Great Again" hats at Wal-Mart, or 7,065 hats for every Apple employee.

But a hat-buying spree seems unlikely. Apple would probably just raise its dividend or repurchase more stock.

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John Maxfield has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

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