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To expand on some other people's comments: Dividends are post-tax and have to be brought back to the US before they are paid out. Apple has a whole bunch of mo
by cowsandmilk 10y ago
To expand on some other people's comments:
Dividends are post-tax and have to be brought back to the US before they are paid out. Apple has a whole bunch of money sitting overseas that it has not paid taxes on. So, if Apple brings it back to pay to shareholders as a dividend, 40% goes to the US government and 60% to shareholders.
Let's say Trump tells Apple (and other companies) they can bring the money back with a 10% tax. Now, the shareholders get 90% of the money as a dividend, which is 1.5X the 60%.
In order to pay dividends and not pay taxes, Apple has actually gone the route of borrowing money. So, they borrow money in the US and pay a low interest rate while their cash sits overseas.
- dzhiurgis 10y ago> In order to pay dividends and not pay taxes, Apple has actually gone the route of borrowing money. So, they borrow money in the US and pay a low interest rate while their cash sits overseas. Wow really. That's clever but also weird. Don't they sustain themselves US being largest market?
- deleted 10y ago[deleted]
- eridius 10y ago> Apple has a whole bunch of money sitting overseas that it has not paid taxes on. To clarify: they haven't paid US taxes on it. They've paid whatever taxes are levied by the foreign countries they're operating in, but the US also double-taxes that same money if it's brought back into the US.
- kilotaras 10y agoI may be wrong but my understanding is US taxes the difference between foreign and domestic tax rates.
- DanielBMarkham 10y agoAlso once they pay tax (again) on it to get it into the U.S., it gets taxed a third time if they distribute it to the shareholders.