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> Apple, Oracle, Google Inc. and seven of their biggest peers now have in excess of $500 billion of cash and marketable securities, up more than three-fold sinc

> Apple, Oracle, Google Inc. and seven of their biggest peers now have in excess of $500 billion of cash and marketable securities, up more than three-fold since 2008, according to data compiled by Bloomberg. The problem is much of it is stuck overseas. Stuck overseas in the sense that these corporations aren't willing to pay American taxes [1], insisting on using complex tax loopholes that essentially leave the bill on the doorsteps of normal, hard working American citizens. [1] http://dealbook.nytimes.com/2013/10/08/to-cut-corporate-taxes-a-merger-abroad-and-a-new-home/?_r=0 http://dealbook.nytimes.com/2013/10/08/to-cut-corporate-taxe...

twoodfin 11y ago
Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)
- anigbrowl 11y ago
  Besides the fact that they're a US company, enjoying access to the world's deepest capital markets and most sophisticated and responsive legal system (the US legal system works incredibly well from a corporate perspective), you're implying that they're paying the same rate of tax as their domestic competitors in Germany and China/ I'm not sure this is the case, and in any case such local taxes would be deductible from US obligations under tax treaties, as far as I am aware (not a tax lawyer or accountant, consult a professional before setting up a megacorporation of your own).
- rayiner 11y ago
  I think you answered your own question.
  - rconti 11y ago
    Is it a moral imperative in your opinion? Is it based on what other countries do? (hint: no) IMO, it is non-obvious that they are obligated to do so.
- IBM 11y ago
  The answer is they shouldn't and the U.S. needs to get a territorial tax system as soon as possible.
- deleted 11y ago
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- sbov 11y ago
  Why should Apple be able to pay Irish taxes on a product designed in California, manufactured in China, and sold in Germany. It makes even less sense.
  - Alphasite_ 11y ago
    Which is why these countries are changing the laws, see Google tax in the UK.
  - adam419 11y ago
    Because Apple et al can put the extra capital to better use than the united states government.
    - tdees40 11y ago
      Apple appears to be terrible at deploying capital. Most of it is just sitting around in cash. It's actually hard to imagine a worse allocator of capital.
      - adam419 11y ago
        By Apple et al I meant private enterprise.
      - oldmanjay 11y ago
        I suppose the government could confiscate a hundred billion and use it to invade a small country for a few weeks. I'm not going to put down your imagination but it didn't take me long to think of a worse use.
        toomuchtodo 11y ago
        I was thinking today that Apple could plow that money into Solar City's SolarBonds [1]. Short maturity dates are available, so they'd be getting their capital back quickly, its a safe investment, and it both helps their image and the environment. https://solarbonds.solarcity.com/ https://solarbonds.solarcity.com/
- deleted 11y ago
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- deleted 11y ago
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- jusben1369 11y ago
  Errr because they're headquartered in the US and rely on the shield of the US government when it comes to rule of law, educating their workforce, providing the infrastructure etc for them to be in the position where they are today? In this day and age it makes _less_ sense to try and tax based on where componentry or network services or consumers start or finish.
  - mahyarm 11y ago
    But apple & co isn't just in the USA, and many of their best workers were educated & raised in other countries.
  - charlesdm 11y ago
    Only an American could have written this answer. All other countries in the world use a non global taxation system. Two basic scenarios: 1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65 2. UK entity owns a company in Sweden. Swedish company earns $100, pays 22% tax on that, and is left with $78. Declares a dividend to the UK parent, which is then left untaxed. Why does 2 make more sense than 1? Because the money was generated in Sweden, and the fact that some parent/holding entity is UK based does not matter (like, at all). Scenario 1 pushes US companies to expand abroad (i.e. through foreign M&A), and not repatriate any profits back to the US. It also makes it easier for non US entities to acquire US companies, because they can achieve larger tax synergies than a domestic US acquirer would. A US company trying to achieve something like that would have to do an inversion, which sometimes can be hard to do. The current state of the US tax code is a great example why Microsoft paid a whopping $2bn for something like Minecraft (Sweden based), or an even larger amount for Luxembourg based Skype. What can they do with that cash otherwise? It's not like they're going to repatriate (ever) without a tax holiday.
    - tormeh 11y ago
      You know, I think maybe this taxation system is a part of why US companies become so successful. It basically forces any US company that sells overseas to become a multinational.
- ryandrake 11y ago
  Why not? If I, as a US Citizen, moved to China or Germany to work there, I still owe US taxes on my income there.
  - mahyarm 11y ago
    The USA is _VERY_ unique in the world this way. Every other citizen of the world has the freedom to move away and stop paying taxes to their home country if they make no income from it.
    - tanderson92 11y ago
      That hardly is an excuse for US corporations to avoid tax obligations. Rather it shows the two standards of treatment of the US towards real people and corporation "people".
      - mahyarm 11y ago
        Think of multinational corporations as multinational families, each one with their own singular citizenship. It makes no sense to tax the family members of other countries until they send money to the family member in your country. If the other family members decided it was a bad idea to send you money to your country because it will be taxed to death, can you blame them?
        tanderson92 11y ago
        >Think of multinational corporations as multinational families, each one with their own singular citizenship. Why should I? Of course this is not actually what they are, or at least what they claim to be. That is, since money is fungible in a global economy they can in effect use untaxed funds to influence U.S. political campaigns while they claim they are a single person deserving of the same rights afforded by the constitution. U.S. persons cannot do that. This is what I mean by the double standard.
        11y ago
- IkmoIkmo 11y ago
  They pay taxes over there alright (e.g. VAT), which is fine, nobody complains. The issue is they don't pay corporate tax on it in the US, despite the fact Apple is US based and does virtually all of its work in the US, and then commissions factories it doesn't own in China to produce its parts. The end result is that it pays much fewer taxes than citizens do, or companies that don't have a dedicated fiscal team (mostly SMEs which comprise the bulk of American firms, e.g. 90% of firms have less than 20 employees, and 99.9% have less than 500). Now it's one thing to say it's justified because Apple would have to go out of business and lay off thousands of of their 100k employees. But we can all take a look at that financial situation and make our own moral judgement on whether they should have effective tax rates much lower than a regular business.
  - misterbee 11y ago
    thought experiment: What if Apple spun out Apple Design as a US company and paid it contract rates to invent, much like it outsources factories to Chinese companies? then how are the holding-companies profits taxes?
cmsmith 11y ago
And the corporations only hold out for a repatriation holiday because there has been one in the past, and there is a decent chance of there being one in the near future. This is a slippery legislative cliff - once you indicate a willingness to have the holiday, there is no point in not just dropping the tax rate permanently since no one will bring their billions in otherwise. I wonder what would happen if we passed an un-repealable law (if such a thing existed) that prohibited tax holidays for the next thirty years?
- minthd 11y ago
  If they use their money to purchase other companies or invest in r&d , this isn't taxed, right ?
- Kalium 11y ago
  > I wonder what would happen if we passed an un-repealable law (if such a thing existed) that prohibited tax holidays for the next thirty years? It's really not possible. We can even repeal constitutional amendments.
  - progmanal 11y ago
    You could change the amendment process at the same time the amendment was amended that you don't want repealed.
  - cmsmith 11y ago
    Hence my parenthetical. But since you mentioned amendments, you should look into the Corwin Amendment [1], which was written to preclude its own repeal. The amendment was an all-in attempt to appease the slave states and prevent the Civil War, but was too little and too late. The purpose may be distasteful to the modern reader, and may not have held up in court ('Can Jesus microwave a burrito so hot that he cannot eat it?'), but it's there. [1] http://en.wikipedia.org/wiki/Corwin_Amendment http://en.wikipedia.org/wiki/Corwin_Amendment
    - 0xffff2 11y ago
deleted 11y ago
[deleted]
melling 11y ago
You could change the world with $500 billion if you spent it effectively. Unfortunately, Google is the only company doing moonshot projects. I hope Apple adds a few more products to their lineup.
jeffbax 11y ago
I would say that the bill is being left by congress by spending a ludicrous sum of money, not by corporations acting rationally (and taking advantage of/keeping countries competitive with one another). The real danger is with the upcoming BEPS plan, and whether it will cause a rush of companies moving the high tech jobs fueling the economy as it is today overseas: http://www.nytimes.com/2015/06/10/opinion/obamas-corporate-tax-blunder.html?_r=0 http://www.nytimes.com/2015/06/10/opinion/obamas-corporate-t...

twoodfin 11y ago

Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)

anigbrowl 11y ago
Besides the fact that they're a US company, enjoying access to the world's deepest capital markets and most sophisticated and responsive legal system (the US legal system works incredibly well from a corporate perspective), you're implying that they're paying the same rate of tax as their domestic competitors in Germany and China/ I'm not sure this is the case, and in any case such local taxes would be deductible from US obligations under tax treaties, as far as I am aware (not a tax lawyer or accountant, consult a professional before setting up a megacorporation of your own).
rayiner 11y ago
I think you answered your own question.
- rconti 11y ago
  Is it a moral imperative in your opinion? Is it based on what other countries do? (hint: no) IMO, it is non-obvious that they are obligated to do so.
IBM 11y ago
The answer is they shouldn't and the U.S. needs to get a territorial tax system as soon as possible.
deleted 11y ago
[deleted]
sbov 11y ago
Why should Apple be able to pay Irish taxes on a product designed in California, manufactured in China, and sold in Germany. It makes even less sense.
- Alphasite_ 11y ago
  Which is why these countries are changing the laws, see Google tax in the UK.
- adam419 11y ago
  Because Apple et al can put the extra capital to better use than the united states government.
  - tdees40 11y ago
    Apple appears to be terrible at deploying capital. Most of it is just sitting around in cash. It's actually hard to imagine a worse allocator of capital.
    - adam419 11y ago
      By Apple et al I meant private enterprise.
    - oldmanjay 11y ago
      I suppose the government could confiscate a hundred billion and use it to invade a small country for a few weeks. I'm not going to put down your imagination but it didn't take me long to think of a worse use.
      - toomuchtodo 11y ago
        I was thinking today that Apple could plow that money into Solar City's SolarBonds [1]. Short maturity dates are available, so they'd be getting their capital back quickly, its a safe investment, and it both helps their image and the environment. https://solarbonds.solarcity.com/ https://solarbonds.solarcity.com/
deleted 11y ago
[deleted]
deleted 11y ago
[deleted]
jusben1369 11y ago
Errr because they're headquartered in the US and rely on the shield of the US government when it comes to rule of law, educating their workforce, providing the infrastructure etc for them to be in the position where they are today? In this day and age it makes _less_ sense to try and tax based on where componentry or network services or consumers start or finish.
- mahyarm 11y ago
  But apple & co isn't just in the USA, and many of their best workers were educated & raised in other countries.
- charlesdm 11y ago
  Only an American could have written this answer. All other countries in the world use a non global taxation system. Two basic scenarios: 1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65 2. UK entity owns a company in Sweden. Swedish company earns $100, pays 22% tax on that, and is left with $78. Declares a dividend to the UK parent, which is then left untaxed. Why does 2 make more sense than 1? Because the money was generated in Sweden, and the fact that some parent/holding entity is UK based does not matter (like, at all). Scenario 1 pushes US companies to expand abroad (i.e. through foreign M&A), and not repatriate any profits back to the US. It also makes it easier for non US entities to acquire US companies, because they can achieve larger tax synergies than a domestic US acquirer would. A US company trying to achieve something like that would have to do an inversion, which sometimes can be hard to do. The current state of the US tax code is a great example why Microsoft paid a whopping $2bn for something like Minecraft (Sweden based), or an even larger amount for Luxembourg based Skype. What can they do with that cash otherwise? It's not like they're going to repatriate (ever) without a tax holiday.
  - tormeh 11y ago
    You know, I think maybe this taxation system is a part of why US companies become so successful. It basically forces any US company that sells overseas to become a multinational.
ryandrake 11y ago
Why not? If I, as a US Citizen, moved to China or Germany to work there, I still owe US taxes on my income there.
- mahyarm 11y ago
  The USA is _VERY_ unique in the world this way. Every other citizen of the world has the freedom to move away and stop paying taxes to their home country if they make no income from it.
  - tanderson92 11y ago
    That hardly is an excuse for US corporations to avoid tax obligations. Rather it shows the two standards of treatment of the US towards real people and corporation "people".
    - mahyarm 11y ago
      Think of multinational corporations as multinational families, each one with their own singular citizenship. It makes no sense to tax the family members of other countries until they send money to the family member in your country. If the other family members decided it was a bad idea to send you money to your country because it will be taxed to death, can you blame them?
      - tanderson92 11y ago
        >Think of multinational corporations as multinational families, each one with their own singular citizenship. Why should I? Of course this is not actually what they are, or at least what they claim to be. That is, since money is fungible in a global economy they can in effect use untaxed funds to influence U.S. political campaigns while they claim they are a single person deserving of the same rights afforded by the constitution. U.S. persons cannot do that. This is what I mean by the double standard.
        11y ago
IkmoIkmo 11y ago
They pay taxes over there alright (e.g. VAT), which is fine, nobody complains. The issue is they don't pay corporate tax on it in the US, despite the fact Apple is US based and does virtually all of its work in the US, and then commissions factories it doesn't own in China to produce its parts. The end result is that it pays much fewer taxes than citizens do, or companies that don't have a dedicated fiscal team (mostly SMEs which comprise the bulk of American firms, e.g. 90% of firms have less than 20 employees, and 99.9% have less than 500). Now it's one thing to say it's justified because Apple would have to go out of business and lay off thousands of of their 100k employees. But we can all take a look at that financial situation and make our own moral judgement on whether they should have effective tax rates much lower than a regular business.
- misterbee 11y ago
  thought experiment: What if Apple spun out Apple Design as a US company and paid it contract rates to invent, much like it outsources factories to Chinese companies? then how are the holding-companies profits taxes?

cmsmith 11y ago

And the corporations only hold out for a repatriation holiday because there has been one in the past, and there is a decent chance of there being one in the near future. This is a slippery legislative cliff - once you indicate a willingness to have the holiday, there is no point in not just dropping the tax rate permanently since no one will bring their billions in otherwise. I wonder what would happen if we passed an un-repealable law (if such a thing existed) that prohibited tax holidays for the next thirty years?

minthd 11y ago
If they use their money to purchase other companies or invest in r&d , this isn't taxed, right ?
Kalium 11y ago
> I wonder what would happen if we passed an un-repealable law (if such a thing existed) that prohibited tax holidays for the next thirty years? It's really not possible. We can even repeal constitutional amendments.
- progmanal 11y ago
  You could change the amendment process at the same time the amendment was amended that you don't want repealed.
- cmsmith 11y ago
  Hence my parenthetical. But since you mentioned amendments, you should look into the Corwin Amendment [1], which was written to preclude its own repeal. The amendment was an all-in attempt to appease the slave states and prevent the Civil War, but was too little and too late. The purpose may be distasteful to the modern reader, and may not have held up in court ('Can Jesus microwave a burrito so hot that he cannot eat it?'), but it's there. [1] http://en.wikipedia.org/wiki/Corwin_Amendment http://en.wikipedia.org/wiki/Corwin_Amendment
  - 0xffff2 11y ago

deleted 11y ago

[deleted]

melling 11y ago

You could change the world with $500 billion if you spent it effectively. Unfortunately, Google is the only company doing moonshot projects. I hope Apple adds a few more products to their lineup.

jeffbax 11y ago

I would say that the bill is being left by congress by spending a ludicrous sum of money, not by corporations acting rationally (and taking advantage of/keeping countries competitive with one another). The real danger is with the upcoming BEPS plan, and whether it will cause a rush of companies moving the high tech jobs fueling the economy as it is today overseas: http://www.nytimes.com/2015/06/10/opinion/obamas-corporate-tax-blunder.html?_r=0 http://www.nytimes.com/2015/06/10/opinion/obamas-corporate-t...