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How realistic is it that a $5 billion fund can move a non-trivial amount of iPhone manufacturing to the US? Most of the BOM supply chain is in Asia, and assembl

How realistic is it that a $5 billion fund can move a non-trivial amount of iPhone manufacturing to the US? Most of the BOM supply chain is in Asia, and assembly at FoxConn I heard amounts to 3% of the cost. It seems like Apple would have to build mostly automated assembly in the US or suffer severe margin reduction, and they'd suffer turnaround issues with the crucial components being still sourced in China. However, given the issue with iCloud, you can see that they've now realized they have to reduce the leverage China has over time, but $5 billion seems way too small to move an entire logistics manufacturing chain, they need a moonshot for this. Apple spends way too much on stock buybacks and dividends and not enough on reinvestment. Elsewhere in this thread, the pro-Trumpists don't seem to get why people were opposed to the tax plan: The fear many people have is that this repatriation will mostly go to stock buybacks, dividends, and executive compensation just like the last 3 times there was a repatriation event. The last repatriation event didn't make a dent in national income growth or GDP, it barely moved the needle. The Democrats wanted the funds to be spent on infrastructure, or education as an offset. The GOP decided to spend any increased revenue on lowering the estate tax and marginal tax rate cuts to avoid the cutoff for reconciliation. Since Democrats, backed by tech companies, had long supported repatriation. The GOP had a chance to pass a clean corporate tax bill that left everything else alone. Everyone knows the reductions for marginal rates at the high end and the estate tax changes aren't going to affect GDP much, and the net result of that was to impose double taxation on some states due to SALT deduction changes, and increase the deficit by $1.5 trillion. Apparently, double taxation is bad if it's the estate tax, but not if you're in California, New York, etc. A practical, clean, corporate tax reform bill would have been better, especially if it was synchronized with international partners to try and close loopholes. For this reason, although the tax plan had some good aspects to it, overall, it's a very bad bill and I doubt the positives to Apple are going to offset the negatives to the rest of the economy.

spoiledtechie 9y ago
If its stock buy backs, then why is Apple creating jobs and a new campus with the capital?
- Scipio_Afri 9y ago
  Apple has $238 billion in cash in it's bank accounts. It was able to do this even if the tax code didn't change.
  - danjayh 9y ago
    They timing seems awfully strange for that explanation to work. Remember, corporations do what makes the best sense financially. Even though they could do this before, they didn't, because it didn't make sense.
    - tankerdude 9y ago
      It’s timing. They could have done it, but waiting for just a little bit, would net them billions. Like the article said, they prepped a certain amount and waited. Saving billions for doing the same thing but waiting a few months is a no brainer.
  - akvadrako 9y ago
    Did it have $238B domestically? The topic is about Apple being able to bring their cash horde back to the US, where they can then use it.
    - cromwellian 9y ago
      They don't need to repatriate that. They have tens of billions domestically, and can use debt instruments against their overseas money. Who wouldn't lend Apple money at very low interest rates, given >$150 billion in collateral in the bank. Apple has already been doing buybacks and dividends by using bonds.
      - akvadrako 9y ago
        The bonds have to be paid back eventually, so it's just delaying the inevitable.
danjayh 9y ago
Speak for yourself. I'm not at the high end of the income curve - not in the 1%, not even in the 10%, and I'm getting almost a $4k tax cut next year. I ran the numbers for my friends who are probably in the bottom half of the income curve (they make just over 40k between the two of them), and they're getting about a $1200 reduction. They were pretty shocked, since they'd been told over and over that it's not really a cut for lower income people. I think the truth is that the cut is smaller in high tax states, and much larger across the board in lower tax states. Also, it's not double taxation. The SALT money is taxed in the states and spent in the states. Why should those states that choose to have large internal governments get a discount on their federal contribution percentages? They receive the same services and benefits...
- enraged_camel 9y ago
  Stop using anecdotes and start using data: https://www.nytimes.com/interactive/2017/12/17/upshot/tax-calculator.html https://www.nytimes.com/interactive/2017/12/17/upshot/tax-ca...
  - Mountain_Skies 9y ago
    n=1 feels pretty valid when that 1 is you.
- SomewhatLikely 9y ago
  Those cuts are not permanent though. They taper off and end within 10 years and will need to be renewed through future legislation leading to even further deficit impact beyond the $1.5 trillion. Meanwhile, the corporate tax cut and I believe estate tax cut are permanent and will not require renewal.
- cromwellian 9y ago
  It is double taxation, and that was the whole original justification for the deduction, which started in 1862, predates that even further, and even the founding fathers discussed it. Secondly, let's dispense with this damned notion that the SALT deduction is somehow the high tax states benefiting at the expense of the low tax states, it is precisely the opposite. High tax states raise money and take better care of their citizens, and so their citizens consume less federal dollars per capita in need. In other words, state spending lowers the burden of the federal government having to pick up the slack. Isn't this the conservative dream? States rights? Spending decisions on social programs being done at the state level, laboratories of democracy and all that? The low tax states, primarily RED STATES, do not spend sufficiently on their populations and as a result, are a larger burden on the federal government, requiring more subsidy. It is the low state states that are raising the cost of government for everyone else and it's quite ludicrous to claim states like CA and NY are being subsidized by this. Most high tax blue states give more money to the federal government than they receive, and most of the low tax red states are a net federal burden. So not only do California and New York already subsidize and pay for benefits that these low tax states aren't providing for their citizens, in addition to taking care of their own residents, their citizens now have to pay for egregious tax cuts and have a further burden thrust on them. If you think the SALT deduction is California and New York benefiting at the expense of the red states, how about we impose a new rule that says your state cannot receive more federal dollars than it pays to the treasury,except in natural disasters and emergencies. Then let's see how long your low tax status lasts. Only a few of the low tax red states are net contributors. The position that local governments shouldn't raise taxes to pay for their own programs is a deliberate attack on the whole concept of local control, states rights, and a smaller federal government. If states are not handling their people's needs, it just means the Federal government will be bigger and more invasive. My question is, why do I have to pay for and subsidize the lack of government in these low tax, freeloader states? I mean, this is a rhetorical question, these are my fellow American citizens and the rich states should help the poor ones. But do you see how this faux GOP messaging about blue states could be turned around? I don't mind that my state is a net giver, but I'm really angry about claims we're takers and need to pay more. If you need more, maybe we'll pay more, but don't try an ideological wealth transfer from blue states to red states to appease your voting block and then turn around and lie about the reasons for these cuts. If you want to close my SALT deduction to pay for much needed middle class relief, infrastructure, or services, I'm all for it. But eliminate it so you can give the top 1% an enormous marginal tax break, or give a handful of ultrawealthy dynastic families an estate tax break? Hell no. Secondly, the GOP tax plan isn't about you. They passed permanent budget busting tax cuts for corporations, for wealthy estates, didn't touch the carried interest loophole, and gave marginal tax cuts that will expire for you in a few years. They tried to eliminate deductability of tuition expenses for kids, for teachers, for medical expenses, and a host of other mostly middle class deductions, while adding loopholes for wealthy prep-school tuition. They hit the endowments of private colleges like Stanford, Harvard, etc with an endowment tax, while trying to exclude religious conservative degree mills. This think is a damn ideological sham with blatant attempts to punish democratically leaning states and institutions that aren't even veiled, and sold as what every knows is a sham, with the new budget deficits providing the justification needed to gut entitlements. I expect I'll be voted down, but my state has high taxes because we like having a top university system, we like taking care of our people, and we like cleaning up our environment. Maybe these other states don't, that's for their voters to decide, it is the right of Californians to spend more of their own money to take of their people instead of asking the Feds to do it.
valuearb 9y ago
No Americans want to make iPhones, those are crappy jobs. We want more engineering jobs.
- LoSboccacc 9y ago
  not everyone is an engineer either
- relaxed 9y ago
  You don't speak for all Americans. Many would be happy to do it.
  - thephyber 9y ago
    > You don't speak for all Americans. Many would be happy to do it. Perhaps. But if they took jobs with approximate pay and work conditions that the Chinese FoxConn employees in company-cities have, that wouldn't look anything like a modern American job. It would look far more like an American coal mining job in the 1920s where workers toil under enormous pressure for meager wages and owe most of them (of not all or more) back to the company town for housing and food. This is AFAICT an accurate description of some of the worst working conditions of FoxConn. And if there is such demand to work in such conditions, then how hasn't some enterprising American company started and supplied that dirt-cheap labor? There isn't enough supply of labor for the demand that you imagine exists.
- talmand 9y ago
  Americans do plenty of so-called "crappy jobs" for the paycheck, if the received amount justifies the crap they have to do. There's work to be done and we can't have 300+ million engineers in one country. Maybe should take a look around at the world you live in.
Someone 9y ago
”How realistic is it that a $5 billion fund can move a non-trivial amount of iPhone manufacturing to the US?” Neither the now-referenced page from Reuters nor Apple’s press release mention that. They will invest in their domestic suppliers and manufacturers, but that’s it, manufacturing-wise.
- madeofpalk 9y ago
  Also probably worth understanding who these 'suppliers' are. I think that when people hear that Apple has thousands of suppliers from 50 US states, people think that they're talking about high-tech suppliers for iPhones. When in reality, Apple is also a retail chain operating in 45 states and has suppliers like cleaners and office suppliers and security that would naturally come locally. Not that these suppliers are worth less, but I don't think the reality matches what people think Apple is saying.

spoiledtechie 9y ago

If its stock buy backs, then why is Apple creating jobs and a new campus with the capital?

Scipio_Afri 9y ago
Apple has $238 billion in cash in it's bank accounts. It was able to do this even if the tax code didn't change.
- danjayh 9y ago
  They timing seems awfully strange for that explanation to work. Remember, corporations do what makes the best sense financially. Even though they could do this before, they didn't, because it didn't make sense.
  - tankerdude 9y ago
    It’s timing. They could have done it, but waiting for just a little bit, would net them billions. Like the article said, they prepped a certain amount and waited. Saving billions for doing the same thing but waiting a few months is a no brainer.
- akvadrako 9y ago
  Did it have $238B domestically? The topic is about Apple being able to bring their cash horde back to the US, where they can then use it.
  - cromwellian 9y ago
    They don't need to repatriate that. They have tens of billions domestically, and can use debt instruments against their overseas money. Who wouldn't lend Apple money at very low interest rates, given >$150 billion in collateral in the bank. Apple has already been doing buybacks and dividends by using bonds.
    - akvadrako 9y ago
      The bonds have to be paid back eventually, so it's just delaying the inevitable.

danjayh 9y ago

Speak for yourself. I'm not at the high end of the income curve - not in the 1%, not even in the 10%, and I'm getting almost a $4k tax cut next year. I ran the numbers for my friends who are probably in the bottom half of the income curve (they make just over 40k between the two of them), and they're getting about a $1200 reduction. They were pretty shocked, since they'd been told over and over that it's not really a cut for lower income people. I think the truth is that the cut is smaller in high tax states, and much larger across the board in lower tax states. Also, it's not double taxation. The SALT money is taxed in the states and spent in the states. Why should those states that choose to have large internal governments get a discount on their federal contribution percentages? They receive the same services and benefits...

enraged_camel 9y ago
Stop using anecdotes and start using data: https://www.nytimes.com/interactive/2017/12/17/upshot/tax-calculator.html https://www.nytimes.com/interactive/2017/12/17/upshot/tax-ca...
- Mountain_Skies 9y ago
  n=1 feels pretty valid when that 1 is you.
SomewhatLikely 9y ago
Those cuts are not permanent though. They taper off and end within 10 years and will need to be renewed through future legislation leading to even further deficit impact beyond the $1.5 trillion. Meanwhile, the corporate tax cut and I believe estate tax cut are permanent and will not require renewal.
cromwellian 9y ago
It is double taxation, and that was the whole original justification for the deduction, which started in 1862, predates that even further, and even the founding fathers discussed it. Secondly, let's dispense with this damned notion that the SALT deduction is somehow the high tax states benefiting at the expense of the low tax states, it is precisely the opposite. High tax states raise money and take better care of their citizens, and so their citizens consume less federal dollars per capita in need. In other words, state spending lowers the burden of the federal government having to pick up the slack. Isn't this the conservative dream? States rights? Spending decisions on social programs being done at the state level, laboratories of democracy and all that? The low tax states, primarily RED STATES, do not spend sufficiently on their populations and as a result, are a larger burden on the federal government, requiring more subsidy. It is the low state states that are raising the cost of government for everyone else and it's quite ludicrous to claim states like CA and NY are being subsidized by this. Most high tax blue states give more money to the federal government than they receive, and most of the low tax red states are a net federal burden. So not only do California and New York already subsidize and pay for benefits that these low tax states aren't providing for their citizens, in addition to taking care of their own residents, their citizens now have to pay for egregious tax cuts and have a further burden thrust on them. If you think the SALT deduction is California and New York benefiting at the expense of the red states, how about we impose a new rule that says your state cannot receive more federal dollars than it pays to the treasury,except in natural disasters and emergencies. Then let's see how long your low tax status lasts. Only a few of the low tax red states are net contributors. The position that local governments shouldn't raise taxes to pay for their own programs is a deliberate attack on the whole concept of local control, states rights, and a smaller federal government. If states are not handling their people's needs, it just means the Federal government will be bigger and more invasive. My question is, why do I have to pay for and subsidize the lack of government in these low tax, freeloader states? I mean, this is a rhetorical question, these are my fellow American citizens and the rich states should help the poor ones. But do you see how this faux GOP messaging about blue states could be turned around? I don't mind that my state is a net giver, but I'm really angry about claims we're takers and need to pay more. If you need more, maybe we'll pay more, but don't try an ideological wealth transfer from blue states to red states to appease your voting block and then turn around and lie about the reasons for these cuts. If you want to close my SALT deduction to pay for much needed middle class relief, infrastructure, or services, I'm all for it. But eliminate it so you can give the top 1% an enormous marginal tax break, or give a handful of ultrawealthy dynastic families an estate tax break? Hell no. Secondly, the GOP tax plan isn't about you. They passed permanent budget busting tax cuts for corporations, for wealthy estates, didn't touch the carried interest loophole, and gave marginal tax cuts that will expire for you in a few years. They tried to eliminate deductability of tuition expenses for kids, for teachers, for medical expenses, and a host of other mostly middle class deductions, while adding loopholes for wealthy prep-school tuition. They hit the endowments of private colleges like Stanford, Harvard, etc with an endowment tax, while trying to exclude religious conservative degree mills. This think is a damn ideological sham with blatant attempts to punish democratically leaning states and institutions that aren't even veiled, and sold as what every knows is a sham, with the new budget deficits providing the justification needed to gut entitlements. I expect I'll be voted down, but my state has high taxes because we like having a top university system, we like taking care of our people, and we like cleaning up our environment. Maybe these other states don't, that's for their voters to decide, it is the right of Californians to spend more of their own money to take of their people instead of asking the Feds to do it.

valuearb 9y ago

No Americans want to make iPhones, those are crappy jobs. We want more engineering jobs.

LoSboccacc 9y ago
not everyone is an engineer either
relaxed 9y ago
You don't speak for all Americans. Many would be happy to do it.
- thephyber 9y ago
  > You don't speak for all Americans. Many would be happy to do it. Perhaps. But if they took jobs with approximate pay and work conditions that the Chinese FoxConn employees in company-cities have, that wouldn't look anything like a modern American job. It would look far more like an American coal mining job in the 1920s where workers toil under enormous pressure for meager wages and owe most of them (of not all or more) back to the company town for housing and food. This is AFAICT an accurate description of some of the worst working conditions of FoxConn. And if there is such demand to work in such conditions, then how hasn't some enterprising American company started and supplied that dirt-cheap labor? There isn't enough supply of labor for the demand that you imagine exists.
talmand 9y ago
Americans do plenty of so-called "crappy jobs" for the paycheck, if the received amount justifies the crap they have to do. There's work to be done and we can't have 300+ million engineers in one country. Maybe should take a look around at the world you live in.

Someone 9y ago

”How realistic is it that a $5 billion fund can move a non-trivial amount of iPhone manufacturing to the US?” Neither the now-referenced page from Reuters nor Apple’s press release mention that. They will invest in their domestic suppliers and manufacturers, but that’s it, manufacturing-wise.

madeofpalk 9y ago
Also probably worth understanding who these 'suppliers' are. I think that when people hear that Apple has thousands of suppliers from 50 US states, people think that they're talking about high-tech suppliers for iPhones. When in reality, Apple is also a retail chain operating in 45 states and has suppliers like cleaners and office suppliers and security that would naturally come locally. Not that these suppliers are worth less, but I don't think the reality matches what people think Apple is saying.