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Tech’s balancing act

Silicon Valley fights Trump on immigration -- but it still wants Trump's tax benefits

Silicon Valley fights Trump on immigration — but it still wants Trump’s tax benefits

 

Late Sunday at the Ninth Circuit Court of Appeals in San Francisco, a group of 97 companies — mostly in the technology sector — filed a “friend of the court” amicus brief strongly condemning the immigration policies of President Donald Trump, a measure that  the brief argues is “inflicting substantial harm on U.S. companies.”

Though tech companies have in the past used economic clout as leverage to support a socially liberal political agenda, Silicon Valley is balancing its opposition to certain Trump policies against the substantial economic benefits tech companies could receive from other parts of the White House agenda.

The brief was filed in support of a Washington state lawsuit against Trump’s new travel ban that got support last week from Seattle-area tech giants like Amazon and Microsoft.

“Immigrants make many of the Nation’s greatest discoveries, and create some of the country’s most innovative and iconic companies,” the brief states. “America has long recognized the importance of protecting ourselves against those who would do us harm. But it has done so while maintaining our fundamental commitment to welcoming immigrants — through increased background checks and other controls on people seeking to enter our country.”

Signed by almost all the major tech companies, including Apple, Google, and Facebook, the brief also includes many Silicon Valley unicorns, such as Snap, Airbnb and Uber — whose chief executive Travis Kalanick resigned from Trump’s Economic Advisory Council last week. Since Trump’s executive order was signed two weeks ago, tech companies have lined up to condemn its suspension of the refugee program and ban on travel from seven majority-Muslim countries. A federal judge temporarily blocked the executive order late Friday night. 

There were some notable signatures missing from the tech community amicus brief, however. Palantir, the software and services company, is absent. One of its co-founders is billionaire investor Peter Thiel, who also happens to be an adviser to Trump’s White House. Another company not on the list is Tesla, whose CEO, Elon Musk, is still part of Trump’s Strategic and Policy Forum and has defended his work with Trump on Twitter as trying to be a positive influence from the inside.

But although tech companies have largely aligned against Trump in a more vocal way than the rest of corporate America, they have still taken high-profile meetings with his administration and stand to benefit greatly from some of his agenda.

Some analysts have suggested tech companies may be stopping short of all-out war with Trump because he promised a so-called tax holiday (also called repatriation) on the huge amount of cash they have stored overseas — and said he’d  deliver on it later in 2017.

On the campaign trail, Trump proposed letting companies with money overseas bring it back into the U.S. at a tax rate of 10 percent, instead of the 35 percent corporate rate. Trump has indicated he would use the repatriated tax money to help pay for a sweeping infrastructure upgrade plan, which makes some members of his own party uncomfortable.

According to Moody’s Investors Service, at the end of 2016 more than one-third of the total $1.3 trillion in cash held overseas by all American companies — outside of the financial sector — was held by just five tech giants: Apple, Microsoft, Cisco Systems, Oracle, and Google’s parent company Alphabet. Of these five, Apple, Microsoft, and Alphabet subsidiary Google signed their names to the amicus brief; Cisco and Oracle did not.

Analysts have pointed out that many companies, tech firms in particular, are raising a lot of money in the debt markets right now. This suggests that the companies don’t think Trump will follow through on his promise to let them repatriate cash at a sufficiently low rate, which means they need to get money for acquisitions and investments from somewhere other than a repatriated tax windfall.

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