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Apple Has a Record $250 Billion In Cash, 90% of It Is Banked Overseas (phonearena.com)
An anonymous reader quotes a report from Phone Arena: On Tuesday, Apple is expected to report its fiscal second quarter earnings. In that report, the tech titan will reportedly announce that it is holding $250 billion in cash. If you think that this is a lot of money, you're absolutely right. According to Marketwatch.com, this is more than the foreign currency reserves held by the U.K. and Canada combined. Looking at it another way, at current valuations Apple could purchase all of the outstanding shares of Walmart and Procter & Gamble and still have money left over. It has taken Apple only 4 and half years to double its cash hoard. During the fiscal first quarter of 2017, Apple was adding $3.6 million to its cash position every hour. It finished the quarter ending in December with $246.09 billion in cash. 90% of the money is banked overseas, which means that Apple would be one of the companies to benefit the most from President Trump's plan to offer a one time tax break on repatriated funds.
wish i could pay no taxes
So, let's say that you have $250 in savings, but 93% of is in an account that penalizes you 35% to use it in the US, would you use it? Let's say the government changes the rule and now it is only 20%, does that really change the situation?
I mean if the US government thinks that a 10% penalty on early withdrawal from a 401K is sufficient to dissuade an average consumer, what do you think 20% looks like to a corporation whose every spend is scrutinized by Wall Street?
Even crazier, with the cost of debt being so cheap, it is actually smarter to leverage to pay for things in the US than to repatriate that money. If they bought a large US based company, they would not use this money, and instead would leverage themselves (either through loans of stock) to complete the sale.
I don't mind paying my taxes. I get a lot in return. I mind that corporations doing business in the USA, and other people, don't pay taxes.
It's not that the money is banked overseas. It's that the money isn't help by Apple directly, but by overseas wholly owned subsidiaries. I don't see why Apple Ireland (for example) couldn't invest its money in the United States just the same as any foreign company. What would be particularly interesting is if Apple Ireland decided to invest it's money in Apple stock. You could get almost all the advantages of a stock buy-back without having to repatriate the money. Am I missing anything, or would that work?
It only would run the federal government for 3 weeks or so.
I know one of you has the PIN. Let's have it. There is enough for all of us.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
... buy Dell then shut it down, just for laughs.
Yet for some reason investors are happy to let that continue, rather than demanding their rightful share of all the profits.
They are happy as long as Apple's stock price keeps rising faster than the rest of the market. Once they no longer get 20% (or more) of a return on their Apple shares, then you will see them demand it be disbursed to their shareholders at an expedited rate.
Reading code is like reading the dictionary - you have to read half of it before you can go back and understand it.
That Apple uses a Nevada corporation to avoid state corporatation taxes in US.
http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html
2 words Sun Microsystems. At the top of the Y2K boom Sun was a company which could do no wrong. It asked eeryone to use its language (Java) and people listened. It sold racks of servers which powered the /Internet. It built its own chips. Then it ran out of money and got acquired by Oracle. Apple wants everyone to use its platform , its Swift language, even build its own chips but it doesnt want to run out of money.
**Life is too short to be serious**
If you want to solve a lot of "problems", don't tax income (which is a horrible idea anyway), simply tax sales based on where the is purchased or used (not necessarily the same place). If you want, you can tax sales based on product class. For example, bread may be taxed at 0%, eggs may be taxed at 3%, while computers are taxed at 10%, with ERP systems being taxed at 20% (or whatever, I'm just picking these numbers out of the air). With this method, your "profit" becomes irrelevant. Besides all that - if Apple were to bring in its $250B into the U.S. "tax free", what do you think would happen to that money? It would go SOMEWHERE. Either to shareholders, or to expand facilities, or R&D, to buy another business, etc. You just collect your tax there. But the U.S. takes the position that it should be able to tax the same money an infinite number of times and the result is that Apple decides to leave its money where it is. Whose fault is that?
must be nice to have $3/hr 60+ hours a week labor to build your stuff in red china.
Seriously. They talk about being eco-friendly, so they really should start covering the back-end of their production chain with conflict-free minerals, eco-friendly mining and aluminum production and the likes. Cash like that buys you giant branches of entire industries and they could use that money to start fixing things inmediately. Call the new subsidary "Apple Raw Materials" or something and spread out eco-standards across the globe through sheer market and marketing force - that would actually be cool and justify the obscene amount of net gain they get per device.
We suffer more in our imagination than in reality. - Seneca
Of course, the key "relevant" country is the home country, in this case, the US. It should be simple for the IRS to simply say that the accounting sleight of hand will not be recognized, as is often done for other tax sheltering strategies.
Easier said than done. In principle you are quite correct. The problem is that any accountant worth his salary can make it very difficult to prove that the transfer "price" isn't a good approximation of correct. Seriously, I'm a certified accountant and I'm telling you point blank that the IRS would have a very difficult time proving that a company like Apple is engaging in fraudulent transfer pricing unless they were incredibly clumsy about how they did it. The IRS simply doesn't have the resources to do an audit deep enough to uncover the truth of the matter in most cases when we are talking about large multinationals.
And transfer pricing is just the tip of the iceberg when it comes to hiding profits and other tax dodging schemes. Large corporations hire huge teams of accountants and lawyers whose entire job it is to find clever legal loopholes in the tax laws and exploit them. The profit for doing so is in the billions of dollars so expecting them to stop is unrealistic.
Sun had 2 specific problems that Apple doesn't have.
1) When the internet bubble burst in the last 90s, Sun's great sales suddenly became a massive liability. Internet bubble companies suddenly stopped paying for the Sun equipment as they went bust. I don't know how much Sun actually got in terms of real revenue vs. billable charges that would have eventually been paid has those companies survived. But this led to a glut of barely used Sun equipment that depressed their prices on new machines and was maybe more than the market could absorb. It's unfair, but Sun basically ended up being punished for being successful.
2) Their failure to quickly respond to the market's demand for lower priced blade type servers vs. their legacy, expensive servers meant that companies who didn't do so well in the bubble like HP and IBM suddenly were selling cheap servers by the truckload in the new market demanding lower cost. Sun lost this segment and even though they eventually sold servers in it, the business that went away didn't ever come back.