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They're smart to wait for a more favorable tax environment for repatriation. It really is backwards that we tax money returning to the United States so aggressi

They're smart to wait for a more favorable tax environment for repatriation. It really is backwards that we tax money returning to the United States so aggressively. It's greatly in our interest to bring that money home.

iloveluce 10y ago
It makes me think why companies haven't hired lobbyist that convince Congress to pass some sort of repatriation bill. It would pay itself in a month
- arikr 10y ago
  What makes you think they haven't already hired lobbyists for this?
- pjc50 10y ago
  There is occasional talk of a tax amnesty that would bring the money back.
  - stale2002 10y ago
    Thats a doubled edged sword. The whole reason why companies keep money overseas is because they are waiting for a tax amnesty deal. But if they knew that no tax deal was EVER coming, then they'd be more willing to bring it back over.
    - valuearb 10y ago
      Even better would be if we just dumped the US Corporate income tax, it's essentially a tax on investment and reinvestment. Not only would all of the money would come back but more of it would stay here. The profits will still get taxed when paid out as dividends. But right now we have high corporate rates. We double-tax the profits with an average rate of around 50% when paid out as dividends (whether you are in the lowest or highest bracket, little difference). We single-tax reinvestment of the profits at around 40% with state income taxes included.
      - ericd 10y ago
        Do foreign investors pay any tax on profits that turn into dividends if the corporate tax rate goes to 0%? What about on the capital gains that results if the money is used on stock buybacks instead? If the corporate rate goes to 0%, capital gains and dividends should be taxed as ordinary income, and the top income tax brackets should be pushed up to their historic 1950's levels, and the profits going out to foreign investors needs to be taxed somehow. Trickle down clearly doesn't work, and we need to start fixing this situation.
- BurningFrog 10y ago
  As money influenced as the US system is, you can't just order any legislation you want for a price.
  - lostlogin 10y ago
    How do you explain the recent changes with ISPs being allowed to sell browsing histories? I get that not anything can be paid for, but it's not a good situation.
ThomPete 10y ago
They shouldn't have been allowed to begin with to send out. But there is nothing to do about it of course.
- trevyn 10y ago
  It's money that they've made overseas from selling products through their foreign retail and wholesale divisions, so they didn't really "send it out."
  - ThomPete 10y ago
    Where are the money they made in the US then?
    - pjc50 10y ago
      .. in the US. Probably paid out in dividends and salaries.
      - jjtheblunt 10y ago
        And invested by Blackburn or whatever the Nevada corp is...Google it.
        donarb 10y ago
        It's called Braeburn, a type of apple.
      - ThomPete 10y ago
        So they have 246B + US hoard?
        valuearb 10y ago
        No, they have $246B minus around $80B in debt. Some of the $246B is overseas.
icebraining 10y ago
Nearly half is in the US anyway: 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...
- valuearb 10y ago
  Sen. Levin never misses a chance to obfuscate the situation for political gain, does he? "can already make a wide range of investments on a tax-free basis, but cannot purchase their own corporate stock or invest in their own businesses, such as by building a new plant. Foreign earnings used for those purposes would instead be treated as repatriated and subject to normal corporate tax rates." Apple can take the accumulated profits it stores in Apple Ireland that is currently invested in Irish/european banks, and invest it in US banks. And it probably does. But it can't pay dividends with that money to shareholders, or it will be hit with 40%+ income tax rates (CA+US) on it. And it can't invest it directly in Apple US to build a campus or R&D center, or factory, without paying 40%+ income tax rates.
cylinder 10y ago
As an individual I am taxed on income I earn overseas. Why shouldn't a corporation?
- billions 10y ago
  Perhaps you shouldn't be either. The US is one of very few countries that do this
  - hackerboos 10y ago
    Actually, most countries do this. Don't confuse the taxes levied on a US citizen's income when living abroad with Apple's situation. Apple is a US corporation.
    - toth 10y ago
      Not sure why this is downvoted to gray, it is correct. In most countries, if you are a tax resident, your foreign income is taxed. What is unusual about US is that it also taxes foreign income for US citizens that are living abroad, almost no countries do this.
      - ajmurmann 10y ago
        Well, we are in good company with Eritrea I guess... https://en.wikipedia.org/wiki/International_taxation#Citizenship https://en.wikipedia.org/wiki/International_taxation#Citizen...
      - Veratyr 10y ago
        I think because the original comment is ambiguous. It isn't clear whether by "income I earn overseas", he's referring to income earned while a tax resident of another country (for example living and working there) or income earned while a tax resident of the US (for example through overseas investment or < 1yr work). One commenter appears to have assumed the former, the person replying assumes the latter.
      - homakov 10y ago
lisper 10y ago
That is far from clear. $250B is 7% of the current M1 money supply. Putting it back in circulation could cause significant inflation.
- valuearb 10y ago
  In 2004 it was estimated the tax holiday brought back $300B, and I would expect it to be a bit higher this time. But there was no burst of inflation in 2004 so I wouldn't expect one this time either.
  - isostatic 10y ago
    So why not just print $300b? If adding $300b to the economy didn't cause inflation, why not do it again? Given every citizen $1k like in the futurama episode. Or use it to fund meals on wheels for a century.
    - ropiku 10y ago
      But those $300b weren't sitting there idle, they were already in the economy in the first place. They don't have to be in the US to be loaned/invested in US companies.
      - lisper 10y ago
        > They don't have to be in the US to be loaned/invested in US companies. They don't? That's news to me. How do you invest in a U.S. company without bringing the money into the U.S.?
gscott 10y ago
That money is mostly Apple intellectual property that's been sold to a foreign apple company and then relicensed to Apple USA... they are just paying themselves to move the money out of the country.
- valuearb 10y ago
  Not true. Apple has to justify how the profits on it's operations are calculated, it's not so easy as that. Apple spends hundreds of millions of dollars designing the iPhone 7 in Cupertino, and then billions marketing it. It makes it in China, spending tens of billion to make it for an average unit cost of $300. It has subsidiaries in many foreign countries that sell it for an average of $600. Where should the profits be calculated? Should all net profits accrue to Cupertino, so that no foreign subsidiary makes any money? That doesn't make sense at all and no US tax authority has ever tried to make Apple account for profits that way. And think about what happens under a system where foreign subsidiaries have to be rolled into the US tax calculations. Apple has to pay 40%+ of that net margin to the US and CA in income taxes. So their effective unit cost of the iPhone 7 is now $420. It now only has $180 in net margin to pay for world wide sales, marketing and R&D, so they have to be tempted to raise their prices substantially. But Samsung gets to make a very similar phone using very similar parts for $300. They don't have to deal with world wide tax systems, so if they price their phones at $600 their Korean taxes will only be on a fraction of the $300. They can even cut prices if they don't need margins as high as Apple. This is the perfect tax system if your goal is to sell more Samsung phones and fewer iPhones. I'm sure it would be great for the US economy.
revelation 10y ago
What is "money returning to the US"? If Apple US foreign activities earned income, they need to tax that income. If Apple Ireland earned income, they need to tax that income in Ireland and there is no "repatriation" tax. Apple says Apple Ireland has no income since all of its profits go towards paying licensing fees to Apple US. So it's income for Apple US, but they haven't paid the tax on it? Right now that money seems to be in limbo with no one having paid any tax on it. If Apple wants to recognize that as US income, surely they should be paying the tax on it. But let's not create some tax holiday so large companies can pay zero tax on foreign activities.

iloveluce 10y ago

It makes me think why companies haven't hired lobbyist that convince Congress to pass some sort of repatriation bill. It would pay itself in a month

arikr 10y ago
What makes you think they haven't already hired lobbyists for this?
pjc50 10y ago
There is occasional talk of a tax amnesty that would bring the money back.
- stale2002 10y ago
  Thats a doubled edged sword. The whole reason why companies keep money overseas is because they are waiting for a tax amnesty deal. But if they knew that no tax deal was EVER coming, then they'd be more willing to bring it back over.
  - valuearb 10y ago
    Even better would be if we just dumped the US Corporate income tax, it's essentially a tax on investment and reinvestment. Not only would all of the money would come back but more of it would stay here. The profits will still get taxed when paid out as dividends. But right now we have high corporate rates. We double-tax the profits with an average rate of around 50% when paid out as dividends (whether you are in the lowest or highest bracket, little difference). We single-tax reinvestment of the profits at around 40% with state income taxes included.
    - ericd 10y ago
      Do foreign investors pay any tax on profits that turn into dividends if the corporate tax rate goes to 0%? What about on the capital gains that results if the money is used on stock buybacks instead? If the corporate rate goes to 0%, capital gains and dividends should be taxed as ordinary income, and the top income tax brackets should be pushed up to their historic 1950's levels, and the profits going out to foreign investors needs to be taxed somehow. Trickle down clearly doesn't work, and we need to start fixing this situation.
BurningFrog 10y ago
As money influenced as the US system is, you can't just order any legislation you want for a price.
- lostlogin 10y ago
  How do you explain the recent changes with ISPs being allowed to sell browsing histories? I get that not anything can be paid for, but it's not a good situation.

ThomPete 10y ago

They shouldn't have been allowed to begin with to send out. But there is nothing to do about it of course.

trevyn 10y ago
It's money that they've made overseas from selling products through their foreign retail and wholesale divisions, so they didn't really "send it out."
- ThomPete 10y ago
  Where are the money they made in the US then?
  - pjc50 10y ago
    .. in the US. Probably paid out in dividends and salaries.
    - jjtheblunt 10y ago
      And invested by Blackburn or whatever the Nevada corp is...Google it.
      - donarb 10y ago
        It's called Braeburn, a type of apple.
    - ThomPete 10y ago
      So they have 246B + US hoard?
      - valuearb 10y ago
        No, they have $246B minus around $80B in debt. Some of the $246B is overseas.

icebraining 10y ago

Nearly half is in the US anyway: 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...

valuearb 10y ago
Sen. Levin never misses a chance to obfuscate the situation for political gain, does he? "can already make a wide range of investments on a tax-free basis, but cannot purchase their own corporate stock or invest in their own businesses, such as by building a new plant. Foreign earnings used for those purposes would instead be treated as repatriated and subject to normal corporate tax rates." Apple can take the accumulated profits it stores in Apple Ireland that is currently invested in Irish/european banks, and invest it in US banks. And it probably does. But it can't pay dividends with that money to shareholders, or it will be hit with 40%+ income tax rates (CA+US) on it. And it can't invest it directly in Apple US to build a campus or R&D center, or factory, without paying 40%+ income tax rates.

cylinder 10y ago

As an individual I am taxed on income I earn overseas. Why shouldn't a corporation?

billions 10y ago
Perhaps you shouldn't be either. The US is one of very few countries that do this
- hackerboos 10y ago
  Actually, most countries do this. Don't confuse the taxes levied on a US citizen's income when living abroad with Apple's situation. Apple is a US corporation.
  - toth 10y ago
    Not sure why this is downvoted to gray, it is correct. In most countries, if you are a tax resident, your foreign income is taxed. What is unusual about US is that it also taxes foreign income for US citizens that are living abroad, almost no countries do this.
    - ajmurmann 10y ago
      Well, we are in good company with Eritrea I guess... https://en.wikipedia.org/wiki/International_taxation#Citizenship https://en.wikipedia.org/wiki/International_taxation#Citizen...
    - Veratyr 10y ago
      I think because the original comment is ambiguous. It isn't clear whether by "income I earn overseas", he's referring to income earned while a tax resident of another country (for example living and working there) or income earned while a tax resident of the US (for example through overseas investment or < 1yr work). One commenter appears to have assumed the former, the person replying assumes the latter.
    - homakov 10y ago

lisper 10y ago

That is far from clear. $250B is 7% of the current M1 money supply. Putting it back in circulation could cause significant inflation.

valuearb 10y ago
In 2004 it was estimated the tax holiday brought back $300B, and I would expect it to be a bit higher this time. But there was no burst of inflation in 2004 so I wouldn't expect one this time either.
- isostatic 10y ago
  So why not just print $300b? If adding $300b to the economy didn't cause inflation, why not do it again? Given every citizen $1k like in the futurama episode. Or use it to fund meals on wheels for a century.
  - ropiku 10y ago
    But those $300b weren't sitting there idle, they were already in the economy in the first place. They don't have to be in the US to be loaned/invested in US companies.
    - lisper 10y ago
      > They don't have to be in the US to be loaned/invested in US companies. They don't? That's news to me. How do you invest in a U.S. company without bringing the money into the U.S.?

gscott 10y ago

That money is mostly Apple intellectual property that's been sold to a foreign apple company and then relicensed to Apple USA... they are just paying themselves to move the money out of the country.

valuearb 10y ago
Not true. Apple has to justify how the profits on it's operations are calculated, it's not so easy as that. Apple spends hundreds of millions of dollars designing the iPhone 7 in Cupertino, and then billions marketing it. It makes it in China, spending tens of billion to make it for an average unit cost of $300. It has subsidiaries in many foreign countries that sell it for an average of $600. Where should the profits be calculated? Should all net profits accrue to Cupertino, so that no foreign subsidiary makes any money? That doesn't make sense at all and no US tax authority has ever tried to make Apple account for profits that way. And think about what happens under a system where foreign subsidiaries have to be rolled into the US tax calculations. Apple has to pay 40%+ of that net margin to the US and CA in income taxes. So their effective unit cost of the iPhone 7 is now $420. It now only has $180 in net margin to pay for world wide sales, marketing and R&D, so they have to be tempted to raise their prices substantially. But Samsung gets to make a very similar phone using very similar parts for $300. They don't have to deal with world wide tax systems, so if they price their phones at $600 their Korean taxes will only be on a fraction of the $300. They can even cut prices if they don't need margins as high as Apple. This is the perfect tax system if your goal is to sell more Samsung phones and fewer iPhones. I'm sure it would be great for the US economy.

revelation 10y ago

What is "money returning to the US"? If Apple US foreign activities earned income, they need to tax that income. If Apple Ireland earned income, they need to tax that income in Ireland and there is no "repatriation" tax. Apple says Apple Ireland has no income since all of its profits go towards paying licensing fees to Apple US. So it's income for Apple US, but they haven't paid the tax on it? Right now that money seems to be in limbo with no one having paid any tax on it. If Apple wants to recognize that as US income, surely they should be paying the tax on it. But let's not create some tax holiday so large companies can pay zero tax on foreign activities.