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> Apple is just sitting on $300 billion (with a b!) dollars currently, and they are just one company. > If anything we should be taxing those war chests higher

by privong 11y ago

> Apple is just sitting on $300 billion (with a b!) dollars currently, and they are just one company. > If anything we should be taxing those war chests higher because sequestering that much money is bad for the economy as a whole. Just to play devil's advocate, is there a chance they're sitting on it because they'd be taxed for using it to finance R&D, acquisitions, or for other uses? And I think you really mean "beginning to tax those war chests", because I don't think corporate holdings continue to be taxed, post income-tax. Am I right that you're essentially advocating negative interest rates for corporate-held cash?

jandrese 11y ago
I think it's more because they just don't know what to do with it. Tax avoidance is an additional incentive, but probably not the main one. I wasn't entirely serious about taxing corporate cash holdings, but as I think about this more may not be the worst idea in the world. Obviously you would set the bar high enough that the tax wouldn't kick in until the corporation went beyond reasonable (maybe at a billion dollars? Not too many corporations make capital investments larger than this do they? And even those would probably be financed for tax reasons.) Make it more expensive to sit on excess cash than to actually use it. Punish complacency.
- abawany 11y ago
  I would argue that activist stockholders are already on this case for their own self-interest: witness Icahn et al compelling Apple to give back some of their cash as additional dividends.
  - kspaans 11y ago
    Wouldn't Apple have to repatriate the cash to the US in order to pay it out as dividends? (And thus pay both corporate income tax and dividend tax on it.)
    - abawany 11y ago
      In the current scheme of things, I believe Apple was able to pay the extra dividends using its income. The activist shareholders agitated for a bigger return to shareholders and Apple complied, as I understand it. I don't believe cash repatriation was required in this scenario. It seems that Apple was also "encouraged" to perform stock buybacks by these investors. ref: http://learnbonds.com/124673/apple-inc-aapl-is-preparing-to-give-carl-icahn-27-5-million/ http://learnbonds.com/124673/apple-inc-aapl-is-preparing-to-...

by privong 11y ago

jandrese 11y ago

I think it's more because they just don't know what to do with it. Tax avoidance is an additional incentive, but probably not the main one. I wasn't entirely serious about taxing corporate cash holdings, but as I think about this more may not be the worst idea in the world. Obviously you would set the bar high enough that the tax wouldn't kick in until the corporation went beyond reasonable (maybe at a billion dollars? Not too many corporations make capital investments larger than this do they? And even those would probably be financed for tax reasons.) Make it more expensive to sit on excess cash than to actually use it. Punish complacency.

abawany 11y ago
I would argue that activist stockholders are already on this case for their own self-interest: witness Icahn et al compelling Apple to give back some of their cash as additional dividends.
- kspaans 11y ago
  Wouldn't Apple have to repatriate the cash to the US in order to pay it out as dividends? (And thus pay both corporate income tax and dividend tax on it.)
  - abawany 11y ago
    In the current scheme of things, I believe Apple was able to pay the extra dividends using its income. The activist shareholders agitated for a bigger return to shareholders and Apple complied, as I understand it. I don't believe cash repatriation was required in this scenario. It seems that Apple was also "encouraged" to perform stock buybacks by these investors. ref: http://learnbonds.com/124673/apple-inc-aapl-is-preparing-to-give-carl-icahn-27-5-million/ http://learnbonds.com/124673/apple-inc-aapl-is-preparing-to-...