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I'm trying to figure out where to start with this comment. 1) What is "business interest loophole"? Do you mean carried interest, which really only applies to

I'm trying to figure out where to start with this comment. 1) What is "business interest loophole"? Do you mean carried interest, which really only applies to investment partnerships and not corporations? 2) The purpose of the Accumulated Earnings Tax is right in the IRS description of it - "The purpose of the accumulated earnings tax is to prevent a corporation from accumulating its earnings and profits beyond the reasonable needs of the business for the purpose of avoiding income taxes on its stockholders." It is generally in society's best interest for companies to reinvest their money in the economy and citizens rather than hoarding it, hence the tax. Or do you disagree with that? 3) I have yet to see anyone take the "we should let corporations bring back their money tax-free" argument beyond just saying that it would somehow magically create jobs. Can you provide a rational breakdown of how this is supposed to work? Apple brings back $200B to the US and then... what? Hires people it doesn't need? Builds factories that won't be profitable? If a company thinks it can make more money by investing in on-shore resources, then it will invest. Instead they're hoarding cash because they don't have anything good to spend it on. The only argument I can see is that ROI for on-shore use of funds has to be higher than the repatriation tax rate to justify bringing the money back, but so what? That just means that we're in an economic situation where no one thinks they can get a 35% ROI on hiring more people or spending more on R&D at the scale of multiple billions per year.

WildUtah 10y ago
1. The business interest loophole is the loophole allowing the expensing of amounts referred to as "Business Interest Expense" in IRS Publication 535. See also Form 1120, line 18. 2. That is a silly motive. It does not hold up to elementary economic scrutiny. That tax is a minor driver compared to the business interest loophole, but is one part of why non-tech companies don't accumulate cash. The fact to be explained in op is why big tech companies hold cash and the various other big business industries in the USA do not. 3. Cash in the hands of principally American companies can be spent on business operations in America. Either a big company can invest it itself or it can distribute cash to stockholders who then invest it in other businesses. Cash locked up overseas will eventually have to be penalized with double taxation so that it can be distributed to stockholders or it will be invested overseas. When it's spent overseas, it will be invested in workers and factories and supplies overseas. US companies and workers could, in theory, bid for those overseas contracts. But overseas suppliers and workers will have big advantages. If the money came home, those jobs and supplier contracts would give advantages to American businesses and workers.
- icebraining 10y ago
  The Senate claims that, according to a survey of 27 multinationals, half the money held overseas is already invested in US treasury notes, funds, bonds, or stocks. https://www.hsgac.senate.gov/subcommittees/investigations/media/new-data-show-corporate-offshore-funds-not-trapped-abroad-nearly-half-of-so-called-offshore-funds-already-in-the-united-states https://www.hsgac.senate.gov/subcommittees/investigations/me...
- mdorazio 10y ago
  Thanks for #1. Can you explain how the loophole actually works in practice for a large company? From my reading, it seems like it would apply mostly to issued corporate bonds, with the interest paid to bondholders deducted from tax liability. If that's right, then I'm not too clear on how it's an unfavorable loophole. In what way is #2 a silly motive exactly? Economics does not operate in a social or governmental vacuum. Corporations exist because societies (and the individuals that compose them) support them, and thus have a rational reason to expect them to use profits to actively participate in those societies. The reason why tech companies hold more cash overseas than other big US industries is fairly well-studied. From [1] "Keeping money overseas is particularly easy for technology and pharmaceutical companies whose profits stem from intellectual property that can swiftly be moved." It's more difficult for non-tech big businesses to use the available legal tricks to claim money was generated overseas. The key word in your #3 is "can" since it's not at all clear what they will do in actuality, nor is it clear that it will actually be good for the US [2]. You also seem to be assuming that there are jobs and supplier contracts domestically that companies aren't investing in as a result of overseas cash, but I have yet to see any evidence of that. In fact it would seem that the whole existence of these massive overseas funds implies the opposite since operating revenue is obviously far in excess of costs (otherwise they wouldn't have huge profits that need to be dumped overseas) and money has been extremely cheap for years even if companies did need additional funding. [1] http://www.bloomberg.com/news/articles/2015-03-04/u-s-companies-are-stashing-2-1-trillion-overseas-to-avoid-taxes http://www.bloomberg.com/news/articles/2015-03-04/u-s-compan... [2] http://www.wsj.com/articles/SB10001424052970203633104576623771022129888 http://www.wsj.com/articles/SB100014240529702036331045766237...
  - 10y ago
chris_va 10y ago
(3) repatriating ... Very few other countries will tax foreign earnings the way the US does. If you were a company would you want to lose 35% of your money to spend it in the US, or just wait to find a project overseas? That tariff is a much higher bar for local investment. And trust me, they have projects they want to spend money on. Most of the money would probably get paid out in dividends if it was only a one-time thing (ala 2004), since you don't want to start projects you cannot fund in the future, but even that pumps more money into other projects in the US indirectly.
- Retric 10y ago
  You can deduct forensic taxes from US taxes owed so it's a long way from 35% most of the time.
  - chris_va 10y ago
    Except most of the money is sheltered using legal tax avoidance ala Dutch Sandwich (nice job EU), so maybe 30%? Either way, CFOs do not like to waste money.
    - WildUtah 10y ago
      The EU is deepening the problems with non-territorial US taxes with its loony tax loopholes. Still, the USA could just end the problem entirely by going territorial.
      - chris_va 10y ago
        That makes very little sense. Why would the US be entitled to money earned in another country by a non US entity?
        Retric 10y ago
        I don't think companies should be able to operate subsidiary's because it's not a separate entity. This would prevent a lot of bad behavior and I am unsure of any net gains for society.
guimarin 10y ago
3.) I'll take that position. Tax repatriation holiday please! Money is only useful at a macro scale if it's in motion. These cash reserves are worthless if they just accumulate. Better to take them back into the US, and be distributed as dividends to shareholders or through buy backs than to leave them. If that money could be invested internationally it would, and so basically the mere fact that the money is sitting idle in the bahamas is a huge vote of no-confidence in the other economies of the world. Every once and a while you used to see the big companies buy stupid expensive office space in London and other European/asian cities that were experiencing real estate growth. We see that less now probably because they are already well allocated in that asset class. Now you may be thinking, well if it's better to take the money home then leave it sitting there for a decade, consider the following. If you repatriate the money and pay anywhere near the 35% corporate tax rate to do so you have to invest it in the US for at least 5 years with a 10% rate of return before you get back to what you had held internationally. Outside the fact that this is basically impossible to do with hundreds of billions of dollars... Absolutely no quarterly venture (wall street) is going to be allowed to do that, they will be sued into oblivion by their shareholders just for trying. Especially since the US regularly holds repatriation holidays. The only tenable long-term solution to this problem is to not tax corporate earnings from overseas. Tax them through individuals later, but not the corps. Otherwise Apple could exist in one form or another for 100 years with 100s billions of dollars just sitting overseas. Of course people who don't understand economics will argue that this is defrauding the US gov't of legitimate tax revenue, but my argument is the US is not the jurisdiction in which this money was earned, so it should see none of it.
- Retric 10y ago
  Tax holiday's are a terrible waste. Just tax foreign holdings at say 3% per year as an AMT and suddenly all that money starts flowing again.
  - guimarin 10y ago
    I don't see why I would pay 35% of my holdings to avoid having to pay 3%. Also your plan is impossible because it's not Apple or Facebook or Google the US listed entities that own this money, it's independent country specific subsidiaries. The US Gov't has no territorial claim on their asset reserves. The fact that the big companies report the money as their own is a GAAP sleight of hand that everyone knows already understands both sides of in the marketplace.
zkhalique 10y ago
3) What is the US government getting now from all that cash that is not being repatriated? Is it a game of chicken? Apple is using that money, investing it in Chinese companies: http://www.wsj.com/articles/apple-invests-1-billion-in-didi-ubers-rival-in-china-1463106590 http://www.wsj.com/articles/apple-invests-1-billion-in-didi-... It could have been doing that in the USA. It could have acquired Tesla. It still can. Forget creating jobs... Apple is now funding businesses in other countries that will be competing with US companies.
- deleted 10y ago
  [deleted]
- CardenB 10y ago
  Why does it help create jobs for Apple to acquire Tesla? I think that's a poor choice for an example.
- ObeyTheGuts 10y ago
  Um u understand that in china they get same job done for 10% price of what it would cost in usa, thus makes profit, thus is alive and not closed down.
- AnAfrican 10y ago
  That cash is what Apple has left AFTER those investments abroad.
fovc 10y ago
3) The magic behind this argument is the same as the magic behind lowering interest rates: cheaper capital results in more investment and more jobs. If you believe that corporations have a reasonable supply of projects they could fund, that on average funding these projects results in job-creation, and that these projects have varying levels of risk and return, then the argument follows. Based on these assumptions, there are likely to be many projects for which the risk/reward profile would suggest you fund them, except if you have to invest 40-50% more upfront just to repatriate your cash, the economics stop working. If you eliminate the tax, therefore, more of these projects will be funded and jobs will be created. A reasonable follow-up question would be: how many jobs will be created? The $ at stake for the government is knowable I imagine, so it would be interesting to look at $/job or some such cost/benefit metric. This is getting too far down the toy model, but one answer might be: if the NPV of a project is >0, then 35% of that NPV is still positive, so the government should "fund" it by allowing the tax holiday (their discount rate is almost surely lower than everyone else's).
- greeneggs 10y ago
  Giving a tax holiday now means that no company will bring its cash back in the future. No CEO wants to bring back a ton of money only to have Congress pass another tax holiday the next year. That's what the 2004 repatriation tax holiday has led to: a few jobs at the moment, but a lot of lost jobs in the long term. Instead of tax holidays or jubilees, we should just institute a sensible tax policy.
WalterBright 10y ago
> rather than hoarding it Nobody hoards cash. It's all invested, one way or another. Even 'cash on deposit' is invested in that the bank loans it out. The idea that cash is withheld from the economy is incorrect. What's happening here is the cash is getting invested in foreign economies rather than local ones, not that it is being withheld or "hoarded".
- rtpg 10y ago
  > Even 'cash on deposit' is invested in that the bank loans it out. If you combine this with the fact that banks work on fractional reserves, then there'd end up being infinite money... but there isn't because it's not true. Of course banks _do_ give out loans, but they're not at 100%. And there are capital limits and the like... Look at Japan. Why do you think the central bank is at negative interest rates is because banks aren't loaning out money. Or they are but companies aren't spending the money, which basically comes out to the same thing, minus a credit subsidy. I think if you dig deeper into this problem, you'll find both that there's a decent inflow into banks that don't have corresponding outflow.
  - WalterBright 10y ago
    I do know about fractional reserve banking, and know that the government requires a minimum reserve percentage. The banks holding a percentage required by law is not an instance of corporations hoarding cash. The reason banks offer free checking is so they can get your money on deposit and then make money loaning it out back into the economy. They aren't offering free checking because they are being charitable.
  - gozur88 10y ago
    >If you combine this with the fact that banks work on fractional reserves, then there'd end up being infinite money... but there isn't because it's not true. In practical terms the only limit to the amount of new money is the amount qualified borrowers are willing to borrow. Banks that don't have enough reserves typically borrow from other banks or from the central bank. The central bank (in the US, at least) isn't bound by reserve limits at all and can create money by changing a number in a computer. The lack of lending by banks isn't a problem in and of itself. It's a symptom of the underlying problem, which is a lack of economic activity that would require borrowing.
yummyfajitas 10y ago
It is generally in society's best interest for companies to reinvest their money in the economy and citizens rather than hoarding it, hence the tax. This is generally not true. Consider two uses for a human - he can build a piece of factory or build a home. Suppose the factory has an NPV of $99, while the consumption value of the home has an NPV of $100. The best thing to do with this human's labor is building the home. If we have the AET, the corporation may be taxed $5 on this $100 if they don't build the factory. Therefore the corporation pays $100 for the human to build the factory, creating an NPV of $99 for society. If we don't have the AET, the corporation hoards the cash (or distributes it to shareholders) and the human then builds a home instead of building the factory. The only argument I can see is that ROI for on-shore use of funds has to be higher than the repatriation tax rate to justify bringing the money back, but so what? That just means that we're in an economic situation where no one thinks they can get a 35% ROI You just answered your own question. If you have an X% ROI overseas, the company needs to gain an X+35% ROI in the US for the investment to be equally profitable. If we eliminated the tax on global earnings, then companies will invest the money in projects with an ROI larger than X% and smaller than X+35% that they would not otherwise have done. Do you believe all possible domestic projects have an ROI either smaller than X% or larger than X+35%? That's the only way eliminating this tax wouldn't spur investment.
SilasX 10y ago
2) I do disagree there. It's a widespread misconception IMHO. Holding cash allows greater flexibility and resilience against bad times. It allows you to move quickly on surprising opportunities that have a short window, and insulates you from swings in the credit market. Lower cash holdings and greater reliance on future creditors make you more vulnerable to black swans. (True for both businesses and individuals.) Policies that discourage cash holding "'cause investment is good" are failing to model the costs of being illiquid -- both individual and social. Taken to an extreme, this view would hold that the absolute worst I can do is produce but never consume.
merpnderp 10y ago
There's also the sense of justice in that the offshore money has already been taxed in the countries it was earned in. Why should shareholders, investors, and the company have to pay twice? And who are you to say that money wouldn't be useful in the US? 35% return on investment per year is quite a lot to ask of your money. If you can do that regularly let me know, and you can take over my 401k.
tracker1 10y ago
If they aren't using it and have more than a few years of operational expenses stockpiled, they should turn it over to stock holders as dividend payments.

WildUtah 10y ago

1. The business interest loophole is the loophole allowing the expensing of amounts referred to as "Business Interest Expense" in IRS Publication 535. See also Form 1120, line 18. 2. That is a silly motive. It does not hold up to elementary economic scrutiny. That tax is a minor driver compared to the business interest loophole, but is one part of why non-tech companies don't accumulate cash. The fact to be explained in op is why big tech companies hold cash and the various other big business industries in the USA do not. 3. Cash in the hands of principally American companies can be spent on business operations in America. Either a big company can invest it itself or it can distribute cash to stockholders who then invest it in other businesses. Cash locked up overseas will eventually have to be penalized with double taxation so that it can be distributed to stockholders or it will be invested overseas. When it's spent overseas, it will be invested in workers and factories and supplies overseas. US companies and workers could, in theory, bid for those overseas contracts. But overseas suppliers and workers will have big advantages. If the money came home, those jobs and supplier contracts would give advantages to American businesses and workers.

icebraining 10y ago
The Senate claims that, according to a survey of 27 multinationals, half the money held overseas is already invested in US treasury notes, funds, bonds, or stocks. https://www.hsgac.senate.gov/subcommittees/investigations/media/new-data-show-corporate-offshore-funds-not-trapped-abroad-nearly-half-of-so-called-offshore-funds-already-in-the-united-states https://www.hsgac.senate.gov/subcommittees/investigations/me...
mdorazio 10y ago
Thanks for #1. Can you explain how the loophole actually works in practice for a large company? From my reading, it seems like it would apply mostly to issued corporate bonds, with the interest paid to bondholders deducted from tax liability. If that's right, then I'm not too clear on how it's an unfavorable loophole. In what way is #2 a silly motive exactly? Economics does not operate in a social or governmental vacuum. Corporations exist because societies (and the individuals that compose them) support them, and thus have a rational reason to expect them to use profits to actively participate in those societies. The reason why tech companies hold more cash overseas than other big US industries is fairly well-studied. From [1] "Keeping money overseas is particularly easy for technology and pharmaceutical companies whose profits stem from intellectual property that can swiftly be moved." It's more difficult for non-tech big businesses to use the available legal tricks to claim money was generated overseas. The key word in your #3 is "can" since it's not at all clear what they will do in actuality, nor is it clear that it will actually be good for the US [2]. You also seem to be assuming that there are jobs and supplier contracts domestically that companies aren't investing in as a result of overseas cash, but I have yet to see any evidence of that. In fact it would seem that the whole existence of these massive overseas funds implies the opposite since operating revenue is obviously far in excess of costs (otherwise they wouldn't have huge profits that need to be dumped overseas) and money has been extremely cheap for years even if companies did need additional funding. [1] http://www.bloomberg.com/news/articles/2015-03-04/u-s-companies-are-stashing-2-1-trillion-overseas-to-avoid-taxes http://www.bloomberg.com/news/articles/2015-03-04/u-s-compan... [2] http://www.wsj.com/articles/SB10001424052970203633104576623771022129888 http://www.wsj.com/articles/SB100014240529702036331045766237...
- 10y ago

chris_va 10y ago

(3) repatriating ... Very few other countries will tax foreign earnings the way the US does. If you were a company would you want to lose 35% of your money to spend it in the US, or just wait to find a project overseas? That tariff is a much higher bar for local investment. And trust me, they have projects they want to spend money on. Most of the money would probably get paid out in dividends if it was only a one-time thing (ala 2004), since you don't want to start projects you cannot fund in the future, but even that pumps more money into other projects in the US indirectly.

Retric 10y ago
You can deduct forensic taxes from US taxes owed so it's a long way from 35% most of the time.
- chris_va 10y ago
  Except most of the money is sheltered using legal tax avoidance ala Dutch Sandwich (nice job EU), so maybe 30%? Either way, CFOs do not like to waste money.
  - WildUtah 10y ago
    The EU is deepening the problems with non-territorial US taxes with its loony tax loopholes. Still, the USA could just end the problem entirely by going territorial.
    - chris_va 10y ago
      That makes very little sense. Why would the US be entitled to money earned in another country by a non US entity?
      - Retric 10y ago
        I don't think companies should be able to operate subsidiary's because it's not a separate entity. This would prevent a lot of bad behavior and I am unsure of any net gains for society.

guimarin 10y ago

3.) I'll take that position. Tax repatriation holiday please! Money is only useful at a macro scale if it's in motion. These cash reserves are worthless if they just accumulate. Better to take them back into the US, and be distributed as dividends to shareholders or through buy backs than to leave them. If that money could be invested internationally it would, and so basically the mere fact that the money is sitting idle in the bahamas is a huge vote of no-confidence in the other economies of the world. Every once and a while you used to see the big companies buy stupid expensive office space in London and other European/asian cities that were experiencing real estate growth. We see that less now probably because they are already well allocated in that asset class. Now you may be thinking, well if it's better to take the money home then leave it sitting there for a decade, consider the following. If you repatriate the money and pay anywhere near the 35% corporate tax rate to do so you have to invest it in the US for at least 5 years with a 10% rate of return before you get back to what you had held internationally. Outside the fact that this is basically impossible to do with hundreds of billions of dollars... Absolutely no quarterly venture (wall street) is going to be allowed to do that, they will be sued into oblivion by their shareholders just for trying. Especially since the US regularly holds repatriation holidays. The only tenable long-term solution to this problem is to not tax corporate earnings from overseas. Tax them through individuals later, but not the corps. Otherwise Apple could exist in one form or another for 100 years with 100s billions of dollars just sitting overseas. Of course people who don't understand economics will argue that this is defrauding the US gov't of legitimate tax revenue, but my argument is the US is not the jurisdiction in which this money was earned, so it should see none of it.

Retric 10y ago
Tax holiday's are a terrible waste. Just tax foreign holdings at say 3% per year as an AMT and suddenly all that money starts flowing again.
- guimarin 10y ago
  I don't see why I would pay 35% of my holdings to avoid having to pay 3%. Also your plan is impossible because it's not Apple or Facebook or Google the US listed entities that own this money, it's independent country specific subsidiaries. The US Gov't has no territorial claim on their asset reserves. The fact that the big companies report the money as their own is a GAAP sleight of hand that everyone knows already understands both sides of in the marketplace.

zkhalique 10y ago

3) What is the US government getting now from all that cash that is not being repatriated? Is it a game of chicken? Apple is using that money, investing it in Chinese companies: http://www.wsj.com/articles/apple-invests-1-billion-in-didi-ubers-rival-in-china-1463106590 http://www.wsj.com/articles/apple-invests-1-billion-in-didi-... It could have been doing that in the USA. It could have acquired Tesla. It still can. Forget creating jobs... Apple is now funding businesses in other countries that will be competing with US companies.

deleted 10y ago
[deleted]
CardenB 10y ago
Why does it help create jobs for Apple to acquire Tesla? I think that's a poor choice for an example.
ObeyTheGuts 10y ago
Um u understand that in china they get same job done for 10% price of what it would cost in usa, thus makes profit, thus is alive and not closed down.
AnAfrican 10y ago
That cash is what Apple has left AFTER those investments abroad.

fovc 10y ago

3) The magic behind this argument is the same as the magic behind lowering interest rates: cheaper capital results in more investment and more jobs. If you believe that corporations have a reasonable supply of projects they could fund, that on average funding these projects results in job-creation, and that these projects have varying levels of risk and return, then the argument follows. Based on these assumptions, there are likely to be many projects for which the risk/reward profile would suggest you fund them, except if you have to invest 40-50% more upfront just to repatriate your cash, the economics stop working. If you eliminate the tax, therefore, more of these projects will be funded and jobs will be created. A reasonable follow-up question would be: how many jobs will be created? The $ at stake for the government is knowable I imagine, so it would be interesting to look at $/job or some such cost/benefit metric. This is getting too far down the toy model, but one answer might be: if the NPV of a project is >0, then 35% of that NPV is still positive, so the government should "fund" it by allowing the tax holiday (their discount rate is almost surely lower than everyone else's).

greeneggs 10y ago
Giving a tax holiday now means that no company will bring its cash back in the future. No CEO wants to bring back a ton of money only to have Congress pass another tax holiday the next year. That's what the 2004 repatriation tax holiday has led to: a few jobs at the moment, but a lot of lost jobs in the long term. Instead of tax holidays or jubilees, we should just institute a sensible tax policy.

WalterBright 10y ago

> rather than hoarding it Nobody hoards cash. It's all invested, one way or another. Even 'cash on deposit' is invested in that the bank loans it out. The idea that cash is withheld from the economy is incorrect. What's happening here is the cash is getting invested in foreign economies rather than local ones, not that it is being withheld or "hoarded".

rtpg 10y ago
> Even 'cash on deposit' is invested in that the bank loans it out. If you combine this with the fact that banks work on fractional reserves, then there'd end up being infinite money... but there isn't because it's not true. Of course banks _do_ give out loans, but they're not at 100%. And there are capital limits and the like... Look at Japan. Why do you think the central bank is at negative interest rates is because banks aren't loaning out money. Or they are but companies aren't spending the money, which basically comes out to the same thing, minus a credit subsidy. I think if you dig deeper into this problem, you'll find both that there's a decent inflow into banks that don't have corresponding outflow.
- WalterBright 10y ago
  I do know about fractional reserve banking, and know that the government requires a minimum reserve percentage. The banks holding a percentage required by law is not an instance of corporations hoarding cash. The reason banks offer free checking is so they can get your money on deposit and then make money loaning it out back into the economy. They aren't offering free checking because they are being charitable.
- gozur88 10y ago
  >If you combine this with the fact that banks work on fractional reserves, then there'd end up being infinite money... but there isn't because it's not true. In practical terms the only limit to the amount of new money is the amount qualified borrowers are willing to borrow. Banks that don't have enough reserves typically borrow from other banks or from the central bank. The central bank (in the US, at least) isn't bound by reserve limits at all and can create money by changing a number in a computer. The lack of lending by banks isn't a problem in and of itself. It's a symptom of the underlying problem, which is a lack of economic activity that would require borrowing.

yummyfajitas 10y ago

It is generally in society's best interest for companies to reinvest their money in the economy and citizens rather than hoarding it, hence the tax. This is generally not true. Consider two uses for a human - he can build a piece of factory or build a home. Suppose the factory has an NPV of $99, while the consumption value of the home has an NPV of $100. The best thing to do with this human's labor is building the home. If we have the AET, the corporation may be taxed $5 on this $100 if they don't build the factory. Therefore the corporation pays $100 for the human to build the factory, creating an NPV of $99 for society. If we don't have the AET, the corporation hoards the cash (or distributes it to shareholders) and the human then builds a home instead of building the factory. The only argument I can see is that ROI for on-shore use of funds has to be higher than the repatriation tax rate to justify bringing the money back, but so what? That just means that we're in an economic situation where no one thinks they can get a 35% ROI You just answered your own question. If you have an X% ROI overseas, the company needs to gain an X+35% ROI in the US for the investment to be equally profitable. If we eliminated the tax on global earnings, then companies will invest the money in projects with an ROI larger than X% and smaller than X+35% that they would not otherwise have done. Do you believe all possible domestic projects have an ROI either smaller than X% or larger than X+35%? That's the only way eliminating this tax wouldn't spur investment.

SilasX 10y ago

2) I do disagree there. It's a widespread misconception IMHO. Holding cash allows greater flexibility and resilience against bad times. It allows you to move quickly on surprising opportunities that have a short window, and insulates you from swings in the credit market. Lower cash holdings and greater reliance on future creditors make you more vulnerable to black swans. (True for both businesses and individuals.) Policies that discourage cash holding "'cause investment is good" are failing to model the costs of being illiquid -- both individual and social. Taken to an extreme, this view would hold that the absolute worst I can do is produce but never consume.

merpnderp 10y ago

There's also the sense of justice in that the offshore money has already been taxed in the countries it was earned in. Why should shareholders, investors, and the company have to pay twice? And who are you to say that money wouldn't be useful in the US? 35% return on investment per year is quite a lot to ask of your money. If you can do that regularly let me know, and you can take over my 401k.

tracker1 10y ago

If they aren't using it and have more than a few years of operational expenses stockpiled, they should turn it over to stock holders as dividend payments.