4 ms·

Not sure why you say "corporate refusal." They're trying to minimize their tax liability, which is their fiduciary duty. If you owned a slice of that company

Not sure why you say "corporate refusal." They're trying to minimize their tax liability, which is their fiduciary duty. If you owned a slice of that company, would you want money to go to distributions or taxes? Congress is to blame here. The US tax code is essentially the only one of all countries that doesn't have a regional income policy. The IRS just follows companies and individuals around the world.

Symmetry 9y ago
Shareholders would generally far prefer that tech companies repatriate the money, accept the tax hit, pay it out in dividends.
- opo 9y ago
  I don't think you speak for all shareholders. Is there some evidence investors (except for the Carl Icahns of the world) want their companies to lose 40% of their foreign cash holdings?
_delirium 9y ago
There's no such fiduciary duty to internationally minimize tax liability. Shareholders might push for it, but it's not a legal fiduciary duty. The board of an American company could perfectly well choose to repatriate all foreign income, pay U.S. taxes on it, and then pay out a dividend using the repatriated income. That would even be the more traditional course of action, rather than sitting on a ton of overseas cash that you never pay out to shareholders.
- concede_pluto 9y ago
  What exactly counts as repatriating income? Could a foreign subsidary buy shares of the US entity (akin to a buyback) instead of putting money into the US entity's treasury? Not that I'm a fan of playing games with the market cap rather than rewarding owners... Edit: apparently the IRS did not take kindly to IBM doing exactly this: https://seekingalpha.com/article/893331-how-microsoft-can-free-its-foreign-source-cash-and-return-it-to-shareholders https://seekingalpha.com/article/893331-how-microsoft-can-fr...
- prostoalex 9y ago
  > The board of an American company could perfectly well choose to repatriate all foreign income, pay U.S. taxes on it, and then pay out a dividend using the repatriated income. Considering US corporate tax rate is among the highest in the world, Apple, GM and Coca-Cola have to pay a higher repatriation tax than Samsung, Toyota or Nestle. This seems to give foreign companies a strategic advantage as far as having larger R&D budgets, flexibility to drop prices, etc.
EliRivers 9y ago
Next you'll be telling us they have a legal obligation to maximise shareholder value!

Symmetry 9y ago

Shareholders would generally far prefer that tech companies repatriate the money, accept the tax hit, pay it out in dividends.

opo 9y ago
I don't think you speak for all shareholders. Is there some evidence investors (except for the Carl Icahns of the world) want their companies to lose 40% of their foreign cash holdings?

_delirium 9y ago

There's no such fiduciary duty to internationally minimize tax liability. Shareholders might push for it, but it's not a legal fiduciary duty. The board of an American company could perfectly well choose to repatriate all foreign income, pay U.S. taxes on it, and then pay out a dividend using the repatriated income. That would even be the more traditional course of action, rather than sitting on a ton of overseas cash that you never pay out to shareholders.

concede_pluto 9y ago
What exactly counts as repatriating income? Could a foreign subsidary buy shares of the US entity (akin to a buyback) instead of putting money into the US entity's treasury? Not that I'm a fan of playing games with the market cap rather than rewarding owners... Edit: apparently the IRS did not take kindly to IBM doing exactly this: https://seekingalpha.com/article/893331-how-microsoft-can-free-its-foreign-source-cash-and-return-it-to-shareholders https://seekingalpha.com/article/893331-how-microsoft-can-fr...
prostoalex 9y ago
> The board of an American company could perfectly well choose to repatriate all foreign income, pay U.S. taxes on it, and then pay out a dividend using the repatriated income. Considering US corporate tax rate is among the highest in the world, Apple, GM and Coca-Cola have to pay a higher repatriation tax than Samsung, Toyota or Nestle. This seems to give foreign companies a strategic advantage as far as having larger R&D budgets, flexibility to drop prices, etc.

EliRivers 9y ago

Next you'll be telling us they have a legal obligation to maximise shareholder value!