3 ms·

Why do tax havens exist then?

• WalterBright 9y ago
  Reagan didn't get rid of all of the tax shelters. But the idea that tax havens (i.e. tax shelters) are relatively crummy investments remains. The reason Apple, etc., invest a lot of their cash overseas is not because those are better investments, but because the US corporate taxes are so much higher those foreign investments become more attractive. Level the taxes, and the money will be reinvested back in the US.
  • samsonradu 9y ago
    Media keeps telling us Apple is not investing, but hoarding cash overseas to avoid the taxation. Care to elaborate how and what they are investing in?
    • WalterBright 9y ago
      The media consists of people with journalism degrees, not economics. Such journalists commonly believe in the "cash hoard" theory. To know what they are investing in, consult the Apple Annual Report, which says. Even if the balance sheet says "cash", what they mean is "bank deposits". Bank deposits get loaned out to others, and those others spend it. Nobody borrows money in order to hoard a pile of currency.
      • collyw 9y ago
        Actually when I started worked for a bank, we got an initial talk on the financial system and how it works. It showed that most companies do reinvest most of the cash or pay it out as dividends, it was pointed out that the exception at the time was Microsoft who basally hoarded it. That was 12 years ago. Now Apple are the bigger player and seem to be doing exactly the same.