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"Microsoft will draw upon its overseas cash resources to fund the transaction." This is an important aspect of the deal - bringing money earned overseas into t

"Microsoft will draw upon its overseas cash resources to fund the transaction." This is an important aspect of the deal - bringing money earned overseas into the US is often costly (taxes, etc.). As a result, US companies often end up with cash sitting overseas with nothing to spend it on, and are hesitant to take the hit that happens when they bring it to the US... so this is a great way for Microsoft to use that money in an effective way. According to this article, Microsoft has $60 Billion sitting offshore in order to avoid US taxes: http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple-google-among-top-u-s-companies-parking-cash-offshore-to-reduce-taxes-study-says/ http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple...

nickff 13y ago
Microsoft also used offshore money to buy Skype.
hga 13y ago
Key graff: "The average tax rate these companies currently pay to other countries on this income is just 6.9 percent, well below lower the 35 percent statutory U.S. corporate tax rate." As I recall we (the US) have the highest corporate income taxes in the developed world. It would be a gross dereliction of management's duty to shareholders to repatriate it unless really needed.
- dvmmh 13y ago
  No corporation pays 35%. There are far too many loop holes. The US has the highest rates ON THE BOOKS if you take ZERO deductions and write-offs. http://thinkprogress.org/economy/2013/04/01/1804801/no-american-corporations-aren039t-paying-the-world039s-highest-tax-rate/ http://thinkprogress.org/economy/2013/04/01/1804801/no-ameri...
  - hga 13y ago
    Trivially falsified (the link): "Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30.... And well below the 25.6% companies paid on average from 1987 to 2008." I wonder just what happened starting in early Federal FY 2009, which started on October 1, 2008. Perhaps this: https://en.wikipedia.org/wiki/Great_Recession https://en.wikipedia.org/wiki/Great_Recession? Now, when we're talking about seriously profitable companies I don't deny there are tax breaks to be had, some easy, but does anyone think these companies are better off focusing more on financial engineering or software and electrical engineering? You might compare the parking of cash offshore to Microsoft's buying a $100K Treasury instrument whenever they had too much cash on hand, as their first CFO was horrified, amazed and delighted to discover. ADDED: is this double taxation? In another HN item on this, it was commented that this parked money has already been subject to local taxes: https://news.ycombinator.com/item?id=6321925 https://news.ycombinator.com/item?id=6321925 I know we do that with personal income taxes, absent a tax treaty with the other nation.

nickff 13y ago

Microsoft also used offshore money to buy Skype.

hga 13y ago

Key graff: "The average tax rate these companies currently pay to other countries on this income is just 6.9 percent, well below lower the 35 percent statutory U.S. corporate tax rate." As I recall we (the US) have the highest corporate income taxes in the developed world. It would be a gross dereliction of management's duty to shareholders to repatriate it unless really needed.

dvmmh 13y ago
No corporation pays 35%. There are far too many loop holes. The US has the highest rates ON THE BOOKS if you take ZERO deductions and write-offs. http://thinkprogress.org/economy/2013/04/01/1804801/no-american-corporations-aren039t-paying-the-world039s-highest-tax-rate/ http://thinkprogress.org/economy/2013/04/01/1804801/no-ameri...
- hga 13y ago
  Trivially falsified (the link): "Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30.... And well below the 25.6% companies paid on average from 1987 to 2008." I wonder just what happened starting in early Federal FY 2009, which started on October 1, 2008. Perhaps this: https://en.wikipedia.org/wiki/Great_Recession https://en.wikipedia.org/wiki/Great_Recession? Now, when we're talking about seriously profitable companies I don't deny there are tax breaks to be had, some easy, but does anyone think these companies are better off focusing more on financial engineering or software and electrical engineering? You might compare the parking of cash offshore to Microsoft's buying a $100K Treasury instrument whenever they had too much cash on hand, as their first CFO was horrified, amazed and delighted to discover. ADDED: is this double taxation? In another HN item on this, it was commented that this parked money has already been subject to local taxes: https://news.ycombinator.com/item?id=6321925 https://news.ycombinator.com/item?id=6321925 I know we do that with personal income taxes, absent a tax treaty with the other nation.