4 ms·

It's interesting how some of these companies are sitting on piles of cash but are still so tax avoidant. Many companies aren't doing anything with the money the

It's interesting how some of these companies are sitting on piles of cash but are still so tax avoidant. Many companies aren't doing anything with the money they're saving on taxes. I don't understand it.

toyg 11y ago
That money will keep the lights on (or pivot) when hard times come, which they will (because of economic cycle, landscape changes etc etc). Unlike nation-states, corporations have little incentive to distribute their wealth as soon as they accumulate it.
charlesdm 11y ago
Why pay $5 when you can pay $2? They're being efficient and are optimising business processes.
- mtgx 11y ago
  I wonder if Google will soon use its Deep Mind AI to optimize for where to pay the lowest possible taxes in the world for every single service they offer (and I hope I didn't just give them this idea).
  - jjawssd 11y ago
    You don't need AI for something this simple
    - charlesdm 11y ago
      Hiring a tax law firm at $1,000 an hour is probably way cheaper :-)
  - wickedlogic 11y ago
    ... waiting to hear about google's indirect funding of sea steading projects.
bpodgursky 11y ago
The cash is factored into the stock price. Stockholders figure that sooner or later there will be a tax holiday or equivalent which will let companies bring this money into the US for free, or at least cheaply, and pay it out as dividends or share buybacks. Also, lots of US companies use this overseas cash as collateral to take out low-interest debt from inside the US to fund US expansion (again, because those issuing the cheap debt know that Google etc * could * pay it off if necessary, it's just dumb to pay the 35% if you don't have to).
- charlesdm 11y ago
  + they can use it do fund big acquisitions outside the US. Luxembourg based Skype, for example, for which Microsoft (probably, maybe) overpaid significantly was acquired with foreign reserves. Overpaying on a deal isn't nearly as bad if the alternative is to lose 35% of said money.
  - jsprogrammer 11y ago
    The money isn't really lost though. It would go towards services and infrastructure for everyone. Are those alternatives considered in the corporation's accountings? Please, take this down to -4.
    - lotharbot 11y ago
      the IRS is on record as telling people that they should practice tax avoidance. Tax evasion is about lying to the government so you don't have to pay the taxes you should. Tax avoidance is about changing your behavior in order to reduce your tax burden based on what the government has chosen to incentivize.
    - charlesdm 11y ago
      Absolutely, and they are completely irrelevant to a corporation. For example: a canadian pension fund doesn’t care one bit about paying taxes in France; they care about hitting their targets and achieving a certain annual yield on their (tens of) billions of dollars under management for their beneficiaries. If I’m said fund and a shareholder in a company, if I notice management paying excessive taxes somewhere, I will intervene and force them to reduce taxes as much as legally possible.

toyg 11y ago

That money will keep the lights on (or pivot) when hard times come, which they will (because of economic cycle, landscape changes etc etc). Unlike nation-states, corporations have little incentive to distribute their wealth as soon as they accumulate it.

charlesdm 11y ago

Why pay $5 when you can pay $2? They're being efficient and are optimising business processes.

mtgx 11y ago
I wonder if Google will soon use its Deep Mind AI to optimize for where to pay the lowest possible taxes in the world for every single service they offer (and I hope I didn't just give them this idea).
- jjawssd 11y ago
  You don't need AI for something this simple
  - charlesdm 11y ago
    Hiring a tax law firm at $1,000 an hour is probably way cheaper :-)
- wickedlogic 11y ago
  ... waiting to hear about google's indirect funding of sea steading projects.

bpodgursky 11y ago

The cash is factored into the stock price. Stockholders figure that sooner or later there will be a tax holiday or equivalent which will let companies bring this money into the US for free, or at least cheaply, and pay it out as dividends or share buybacks. Also, lots of US companies use this overseas cash as collateral to take out low-interest debt from inside the US to fund US expansion (again, because those issuing the cheap debt know that Google etc * could * pay it off if necessary, it's just dumb to pay the 35% if you don't have to).

charlesdm 11y ago
+ they can use it do fund big acquisitions outside the US. Luxembourg based Skype, for example, for which Microsoft (probably, maybe) overpaid significantly was acquired with foreign reserves. Overpaying on a deal isn't nearly as bad if the alternative is to lose 35% of said money.
- jsprogrammer 11y ago
  The money isn't really lost though. It would go towards services and infrastructure for everyone. Are those alternatives considered in the corporation's accountings? Please, take this down to -4.
  - lotharbot 11y ago
    the IRS is on record as telling people that they should practice tax avoidance. Tax evasion is about lying to the government so you don't have to pay the taxes you should. Tax avoidance is about changing your behavior in order to reduce your tax burden based on what the government has chosen to incentivize.
  - charlesdm 11y ago
    Absolutely, and they are completely irrelevant to a corporation. For example: a canadian pension fund doesn’t care one bit about paying taxes in France; they care about hitting their targets and achieving a certain annual yield on their (tens of) billions of dollars under management for their beneficiaries. If I’m said fund and a shareholder in a company, if I notice management paying excessive taxes somewhere, I will intervene and force them to reduce taxes as much as legally possible.