Apple Inc. (AAPL), Microsoft Corporation (MSFT), And How a Repatriation Holiday is Sorely Needed

Finally, it incentivizes action on behalf of America’s largest companies to start pushing for repatriation. Apple Inc. (NASDAQ:AAPL) now has its first, though small, maturity walls. The company has a mix of three-, five-, ten-, and thirty-year debt, the first of which will mature in 2016. The 2016 maturity coincides with a Google Inc (NASDAQ:GOOG) bond paying a 2.125% coupon, and a Microsoft Corporation (NASDAQ:MSFT) bond maturing in September 2015.

Conveniently, these three issues mature at the same time, a few congressional elections away, and at the time a new President will be picked in 2016 to be sworn in January 2017. Most importantly, these votes will come at a time when more than 20,000 baby boomers are retiring each and every day. Higher stock market valuations would certainly be a boon to anyone sitting on the retirement fence.

Lower taxes on the horizon?

The United States could afford temporary and permanent cuts to the federal corporate income tax. A letter from several top CEOs to Congress noted that at 35%, the United States’ corporate income tax rate was 10% higher than the OCED average. It is 15% higher when the full cost of state and local taxation is also included.

By now it shouldn’t be news that American corporate tax rates are the most punishing in the developed world.

Those who wish to play on lower taxes have plenty of opportunity. Cash rich Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Google Inc (NASDAQ:GOOG) would benefit tremendously from a one-time repatriation holiday as their billion-dollar bank accounts come back home. Apple Inc. (NASDAQ:AAPL) would stand to save as much as $30 billion in taxes given its current cash on hand, Microsoft Corporation (NASDAQ:MSFT) would save as much as $20 billion, and Google would come up with a $10 billion savings.

A repatriation might even expedite corporate plans to return cash to shareholders. In 2004, Microsoft Corporation (NASDAQ:MSFT) paid a dividend equal to $3.08 per share (a $3 special dividend plus the regular 8 cent quarterly dividend) on news of repatriation.

American companies want to pay their shareholders back. Now Washington D.C. just needs to let them.

The article The U.S. Needs a Repatriation Holiday originally appeared on Fool.com is written by Jordan Wathen.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.