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3.25% is the annual interest rate, it compounds and will cost considerably more than a one-time 10% tax would.
by djrogers 10y ago
3.25% is the annual interest rate, it compounds and will cost considerably more than a one-time 10% tax would.
- TruthSHIFT 10y agoThank you. I was confused.
- ryanwaggoner 10y agoBut surely much of that overseas cash is invested and earning enough that 3.25% interest is erased or at least mostly offset?
- colefichter 10y agoDoesn't the word "cash" imply that the money is not invested? If they bought factories or something else productive, we'd usually refer to that as "capital".
- runako 10y agoIIRC the term is typically "cash and equivalents." [1] There is definitely not the expectation that Apple has $200B+ sitting in checking accounts unable to earn any interest. Treasuries and certain other government securities count as "cash" in most cases. Edit: Apple reports most of the amount bandied about as their "cash" as being in "long-term marketable securities." [2]. So it's a mix that is definitely not designed to all be instantly convertible to USD with no penalty. I'd guess most other large companies manage their cash similarly. 1 - https://en.wikipedia.org/wiki/Cash_and_cash_equivalents#Components_of_cash_equivalents https://en.wikipedia.org/wiki/Cash_and_cash_equivalents#Comp... 2 - https://www.apple.com/newsroom/pdfs/Q2FY17ConsolidatedFinancialStatements.pdf https://www.apple.com/newsroom/pdfs/Q2FY17ConsolidatedFinanc...
- runako 10y agoThe interest is tax-deductible in the US, which further reduces their US tax liability. Also, as ryonwaggoner points out, they are free to buy e.g. Treasuries with the offshore cash so that the effective interest rate closer to 1% (before the effect of the reduction in tax liability).