Slashdot Mirror
Apple, Google and Microsoft Are Hoarding $464 Billion In Cash (cnn.com)
Apple, Google and Microsoft are sitting on a mountain of cash -- and most of it is stashed far away from the taxman. Those three tech behemoths held a total of $464 billion in cash at the end of last year, according to a Moody's report published this week. From a report: Apple alone had a stunning quarter-trillion dollars of cash thanks to years of gigantic profits and few major acquisitions. That's enough money to buy Netflix three times. It's also more cash than what's sitting on the balance sheet of every major industry except tech and health care. All told, non-financial U.S. companies studied by Moody's hoarded $1.84 trillion of cash at the end of last year. That's up 11% from 2015 and nearly two and a half times the 2008 level. Roughly $1.3 trillion -- 70% of the total -- is being held overseas, where the money isn't subject to U.S. taxes. Apple, Google owner Alphabet, Microsoft, Cisco, and Oracle hold 88% of their cash overseas. Moody's said the tower of money stashed abroad reflects the "negative tax consequences of permanently repatriating money to the U.S."
Sure, These companies are based in the US, but they are global companies.
They should not have to pay US taxes on the profits they received via a cellphone sold in Europe.
We have the biggest, most complicated tax code in the history of the universe. We are also the only country that taxes its citizens for income earned while living and working in another country... even after they pay that country's taxes.
I don't really get finance. That's... not good for the economy right?
It's money that's "Not being put to work". Just rotting in a bank account. Extrapolate this, and it's essentially a giant black hole in the economy where money goes in but it doesn't come out. Today we've got a money cycle of farmers buying oil to run their combines and oil-well workers buying food to eat. Today there's a trillion dollars moving back and forth (and being pissed away on recreation) but tomorrow Apple hoards half of that and now the cycle is moving just $500B. So... It's essentially deflation? If they ever dump it back into the markets, that'd be a big wave of inflation, ya? Suddenly there's just more cash in the system. Is half a trillion even enough? How much money is needed to have a noticeable impact on the value of the US dollar?
So it's outside of the USA. Couldn't they go invest it in... China or something? Buy all of Foxconn. Do they have problem bringing it elsewhere? Would they have to pay China income tax if they went there? If it's all Irish money... Buy Guinness. ...I guess that just shifts the fat bank account from the owners of apple to the ex-owners of Guinness... Yeah, to actually make that money work, they'd have to actually launch a new business or expand their business or buy a business that needs expansion.
Inflation is the sort of thing that's supposed to encourage people (or business, in this case) to go DO SOMETHING with their money rather than hoarding it. We should DEFINITELY NOT give them some sort of tax-free day to slip it in. Fuck you, pay me.
This really just demonstrates the stupidity of our current economic system, where money, which is a made-up human construct meant to facilitate the trade in real goods and services, has become more important than said real goods and services. We have a 'market' that pays our best and brightest far more to come up with these pointless number shuffling schemes than to become a doctor, scientist or teacher. We then wonder why, despite all the GDP we have supposedly magiced up in the last decade, many of our doctors, scientists and teachers can no longer afford basic shelter and services for them and their families.
At a government level, we have treasuries slashing public sector spending to provide corporate tax breaks because politicians seem to believe that they can save for the care worker jobs that will be required by the ageing boomers in the future, by putting the young out of work today. Again, all driven by this belief that money is more important than the underlying economy it is meant to facilitate.
And to add to the complete disconnected stupidity, we have central banks busy abusing the monetary system by printing trillions of dollars in an attempt to stop all this warped cash hoarding by the rich from deflating the real economy.
It is really sad, and it is all going to come to a head at some point. Unfortunately I don't think anyone has a clear idea of how to fix it, and there is a great risk that we lurch too far to either the left or right, as has been the pattern throughout history.
I work in Private Equity and have experience with this type of stuff. Honestly in my opinion, there's nothing to see here other than a great case for why the US corporate tax rate should be lower. There are two separate concepts worth discussing. One is money that was MADE offshore and remained offshore, which I don't think anyone should take issue with. That money is used to fund international operations and international acquisitions (and is invested--I recall reading that Apple runs the world's largest hedge fund via its balance sheet cash). No big-wig executive or shareholder benefits from this cash being offshore - in order for them to see any of it, it has to be repatriated, at which point it is subject to US tax. The other concept is money that was made in the US, but is treated as if it was made offshore. The way this works is generally via IP transfer. If a US company transfers its IP to a subsidiary in another country (Ireland is popular, for example), then that US company has to pay royalties to the international subsidiary as it does business. So US Co. makes $100 in search revenue, but has to pay $90 to Ireland Co. for the right to license the IP (oversimplified but that's the gist). $10 gets taxed in the US, and $90 gets taxed in Ireland, the profits remain in those respective countries. Note that when the IP is transferred to the other country, that transaction is taxable - the Irish subsidiary has to "purchase" the IP from the US, which is a taxable event that the US government receives tax income from. However, after the IP is transferred and once operations commence, this becomes frustrating for the US government (and citizens) because money that was made in the US becomes taxed in Ireland. However, even in this case, in order for US executives or shareholders to ever get this cash, the money must be repatriated, at which point it is subject to US tax. So the money ends up just staying offshore, until the company can either negotiate with the US government for more favorable tax treatment, or until it gets used for an offshore purpose. Long story short, if the US corporate tax rate was lower, we would not have this problem. Companies would not transfer IP offshore to achieve more favorable tax structures, they would just keep the money in the US. My personal opinion is that the corporate tax rate that maximizes revenue for the US is much lower than the current 35%.
"Saving" is good, "hoarding" is bad. The choice of words implies the author's desire to confiscate all or part of the monies...
To all those coveting other people's dabloons: they are not yours!.
In Soviet Washington the swamp drains you.