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The fate of the huge cash stockpiles held by Apple Inc. (NASDAQ:AAPL), Cisco Systems, Inc. (NASDAQ:CSCO) and Microsoft Corporation (NASDAQ:MSFT) abroad, lie in the hands of Donald Trump Administration. The trio is currently holding more than $400 billion overseas as the 35% tax rate back at home continues to hinder any repatriation.

Trump’s One-Off Tax Holiday

However, the current administration is willing to play ball a move that many observers believe could avert the negative consequences of repatriating money to the U.S. The U.S president has proposed a one-off tax holiday that will allow companies with operations overseas to bring their vast offshore cash piles at 10%, rather than the statutory 35% rate.

A 10% tax rate, even though higher than the 5.25% onetime repatriation rate offered by President George W. Bush in 2004, would be highly welcomed in the industry. The `10% rate would entice the 50 biggest U.S companies to repatriate profits held overseas given that they will be able to save at least $300 billion.

10% Tax Rare Fate

However, it is still in early days for the likes of Microsoft, Apple Cisco and other U.S companies to start rejoicing about the proposed Trump administration tax plan. There is already growing concerns whether the proposed tax plan will sail through Congress in the current form. Fuelling the concerns is the fact that Republicans have failed to repeal the Affordable Health Care Act even though they have the numbers in Senate.

The fact that the 5.25% one-time rate in 2004 failed to have the desired impact on American job growth is another headwind that could hinder the proposed 10% rate from coming into effect. The Trump administration will have to come up with a way of preventing the likes of Apple, Microsoft, Cisco, and Apple from returning repatriated cash to shareholders if the proposed tax plan is to see the light of day.

“I think that the lesson of the last repatriation holiday is that it’s virtually impossible to prevent companies from doing what they want with repatriated cash in hand,” said Matthew Gardner, a senior fellow at Institute on Taxation and Economic Policy.

Years of gigantic profits saw Apple cash balance rise to highs of a quarter a trillion dollars in the first half of the year. Microsoft on its part had a total of $131.2 billion most of which is abroad just like the iPhone makers. Cisco on its part had a total of $71.8 billion with Alphabet having a total of $86.3 billion.

Apple was up by 1.39% in Friday’s trading session to end the week at $157.48 a share.

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Steve Kanaval: Portfolio Manager/Writer/ Market Analyst Steve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80’s. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90’s managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio’s in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve publishes his views on the asset classes in a public forum and has published more than 10,000 articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg, Equities.com, Hacked.com, CryptoCurrencyNews as a paid contributor. His work includes research, journalism and archived video on important market volatility related to stocks, digital currency and other volatile misunderstood asset classes. He offers a humorous, unique insight and the related back stories and drivers for readers interested in volatility and emerging market assets. Full disclosure Steve is long 25 digital currencies and sits on the board of multiple public companies involved in digital currencies, and owns shares in these companies from time to time.

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