Seeking Alpha

Apple (AAPL), unsurprisingly, has the largest overseas cash balance of any tech company: Moody's...

Apple (AAPL), unsurprisingly, has the largest overseas cash balance of any tech company: Moody's believes it rose 15% in the March quarter to $74B. Joining Apple in the top 5 are Microsoft (MSFT - $50B), Cisco (CSCO - $42.3B), Oracle (ORCL - $25.1B), and Qualcomm (QCOM - $16.5B). Altogether, tech companies account for roughly half of an estimated $457B in overseas cash held by U.S. firms. Efforts to obtain a "tax holiday" on the repatriation of overseas cash have stalled.
Comments (37)
  • Bear Bait
    , contributor
    Comments (664) | Send Message
     
    Many of these companies have massive cash balances here in the US and are not investing that cash in jobs. So, why would we think they would do anything but just add the tax free offshore cash hoards to the onshore cash hoards? My thoughts are; for every dollar spent investing in jobs in the US they can bring one maybe even two bucks in from overseas tax free.
    10 Jul 2012, 12:42 PM Reply Like
  • wigit5
    , contributor
    Comments (3955) | Send Message
     
    That's brilliant in my opinion Bear Bait, for every 1$ they spend in the US Job market they can bring $2 into the US tax free.
    10 Jul 2012, 01:25 PM Reply Like
  • gdgb
    , contributor
    Comments (4) | Send Message
     
    No tax holidays for companies that do not need them. Rather than pursuing congress for a special one time deal. Why not pursue congress to get busy with a proper rewrite of the complete tax code
    10 Jul 2012, 12:48 PM Reply Like
  • diogeron
    , contributor
    Comments (140) | Send Message
     
    I agree. All of this nonsense about companies not hiring because of "uncertainty" about things like tax reform is just that, nonsense. Barry Ritholtz had a great post on his blog about it the other day. Here's the link if anyone is interested. http://bit.ly/LFosD1
    10 Jul 2012, 01:35 PM Reply Like
  • jej
    , contributor
    Comments (63) | Send Message
     
    Yes, we absolutely need a total rewrite of the tax code. Can you guess when that will happen? My best guess is never! In the meantime it is difficult not to think that all this money would be of better use if it was in this country. Need has nothing to do with it. What is best for the country has everything to do with it. Do whatever is needed to get this money into this country.
    10 Jul 2012, 01:48 PM Reply Like
  • rwsmith13
    , contributor
    Comments (26) | Send Message
     
    They get taxed again bringing it home! That's why it isn't coming home! I say let them bring the cash home and not get taxed again! Other countries allow their companies to bring foreign cash home without being taxed again! Our government is so Liberal/Progressive based it can't see the forest because of all the trees in the way!!!!!!!
    10 Jul 2012, 01:05 PM Reply Like
  • johnofarizonaoregon
    , contributor
    Comments (226) | Send Message
     
    I agree on the tax comment.

     

    But you are too kind, to call those in government who refer to themselves as "liberal" or "progressive," "Liberal/Progressive." They are politicians for whom the desired end (more power for themselves) justifies any means.

     

    But I'm also too kind to give them a more fittingly descriptive label.
    10 Jul 2012, 04:22 PM Reply Like
  • minwyhe
    , contributor
    Comments (103) | Send Message
     
    You idiot they never got taxed on it in the first place that is why it is overseas.
    10 Jul 2012, 05:47 PM Reply Like
  • wigit5
    , contributor
    Comments (3955) | Send Message
     
    lol minwyhe way to be blunt!
    11 Jul 2012, 08:42 AM Reply Like
  • iFrank
    , contributor
    Comments (36) | Send Message
     
    GDGB - Agree.
    Important: Put an inflation factor on the definition for high income. Also, the AMT w/o an inflation factor has been a scam from the start. Either delete AMT or raise it to todays dollar value and include the inflation factor. All along its been a stealth tax increase.
    10 Jul 2012, 01:06 PM Reply Like
  • tgentsch
    , contributor
    Comments (2) | Send Message
     
    Tax holiday makes the most sense, otherwise the money stays offshore and is invested offshore. Better chance it will be used in the US if it’s in the US.
    10 Jul 2012, 01:09 PM Reply Like
  • Gary Bushwacher
    , contributor
    Comments (508) | Send Message
     
    My rudementary tax knowledge used to think you were taxed on net income, not cash. I'm having a hard time understanding where this discussion even comes from.
    10 Jul 2012, 01:35 PM Reply Like
  • kmi
    , contributor
    Comments (3980) | Send Message
     
    Some of this cash originates from overseas sales (as income) some it from tax structures used to shelter income earned in the US via subsidiaries or as capital moved for 'permanent investment overseas'.

     

    It was generated as income but taxes were not paid on it.

     

    In order to bring the cash into the US, the current tax code specifies a tax will have to be paid. It was sheltered under the current tax code, and tax must be paid on it under the current tax code.

     

    Apple and others want the US taxpayer to provide a gift of allowing the money to come back into the US tax free.
    10 Jul 2012, 05:01 PM Reply Like
  • jej
    , contributor
    Comments (63) | Send Message
     
    Call it a gift if you like, but wouldn't the country be getting a gift if this money was brought back here?
    12 Jul 2012, 09:28 AM Reply Like
  • kmi
    , contributor
    Comments (3980) | Send Message
     
    Not the country at large.

     

    To benefit the country at large, you should advocate for a tax holiday for all the rest of us in tandem. For example, if Apple or GE get a tax holiday on its earned income, the American people should too.

     

    Then again, the country has bills to pay as a result of creating, growing, and protecting its ability to generate wealth, and it has to fund them somehow. So....
    12 Jul 2012, 10:30 AM Reply Like
  • jej
    , contributor
    Comments (63) | Send Message
     
    Please do not ever think that more taxation will ever reduce debt. Washington will spend whatever we give them. This fact has been proven over and over again. The only way to reduce spending is to turn down the tax spigot.
    13 Jul 2012, 03:57 PM Reply Like
  • wigit5
    , contributor
    Comments (3955) | Send Message
     
    The more leash you give them the further they will run.
    13 Jul 2012, 04:33 PM Reply Like
  • kmi
    , contributor
    Comments (3980) | Send Message
     
    jej,

     

    if you pay your taxes and and follow the law you should be advocating for others to do the same. You may do neither of these things, but for the sake of this comment I will assume you do.

     

    Now, if you want to get into a discussion of whether or not the state should tax us and how much, that's one thing, but advocating for a tax holiday just because some companies have a lot of money stashed overseas and you think you may somehow benefit from it, means you want to give them special privilege to break or circumvent the law because they have a lot of money.

     

    Surely you can extrapolate how this can then be applied to other illegal and immoral activities. Valuing the wealthy and providing them with privileges unavailable to everyone else is not a recipe for a stable or successful state.
    14 Jul 2012, 10:54 AM Reply Like
  • jej
    , contributor
    Comments (63) | Send Message
     
    These companies did not "break or circumvent" the law. They simply followed good business practices. Their actions were taken because of ill advised laws by a government that believes they can spend our money better than we can and therefore make every effort to confiscate our wealth.

     

    And why not allow special treatment for these companies when the government has no problem with providing special favors for companies and individuals on a daily basis (especially for big donors.)
    15 Jul 2012, 09:26 AM Reply Like
  • kmi
    , contributor
    Comments (3980) | Send Message
     
    No they did not break the law. But the law requires taxes to be paid.

     

    Whether the law is ill-advised or not is not relevant. Like I said, if you want to support a special one-off tax exemption for these entities, what makes them more special than you or me or anyone else doing business in the US, and paying taxes, and following the law?

     

    If these entities get a special one-off tax exemption, expect me and many others to look to get our corps special 'one-off' tax exemptions too.

     

    If the law can be changed for them, surely it can be changed for the rest of us - who are also law abiding, tax paying entities - at the same time, correct?
    15 Jul 2012, 03:10 PM Reply Like
  • Adhawan9
    , contributor
    Comments (7) | Send Message
     
    Do one time tax holiday/incentive and then take away the advantage of keeping money offshore. I agree that no company good enough to have a lot of cash is bad enough to spend on reducing national unemployment. Companies must and they do look for opportunities to spend money wisely. Give incentive to search aggressively through R&D and moves into new market areas.
    10 Jul 2012, 01:40 PM Reply Like
  • Hawkeyes 2011
    , contributor
    Comments (269) | Send Message
     
    Great topic!! I agree with rwsmith13 and Gary Bushwacker. This cash is after tax profits (earned for the co. and its shareholders) so there is no holiday needed because they have been taxed several ways except to death (so far). Our liberal thinking friends are always thinking how they can get their hands on the money those nasty corporations have ( major employers by the way). The cash need to be in the U. S. and if the co. wants to return some to its stockholders (dividends and stock buybacks) and use some for growth, R &D and to continue to support our society via continued charitable activities. Remember as a investor the game is " net free cash flow". Obviously our tax code is a mess for sure!!
    10 Jul 2012, 03:02 PM Reply Like
  • johnofarizonaoregon
    , contributor
    Comments (226) | Send Message
     
    Agreed. It is enough already, to tax personal income, dividends, capital gain etc... Let the companies keep their net income, without any more taxes piled on.
    10 Jul 2012, 04:25 PM Reply Like
  • Diveanddig
    , contributor
    Comments (33) | Send Message
     
    Let's see if I have this right. Apple, and other US firms earn profits overseas and pay the local taxes in the respective countries. Now they have to pay US taxes if they want to bring that money home. How stupid is that! I would advise those companies to keep the money overseas and invest it in the local economies instead of taking a double taxation by bring that money home. Guess what, that is what they are doing! They are creating jobs overseas. Thank you ignorant leftist law makers. Some ignorant leftists government officials are so hungry for those unjustified taxes that they will sacrifice our middle class US workers by denying them those jobs here. Apple just announced a research unit in Israel. Think different - do what is best for our labor force, and bring those badly needed dollars back home where it will do the most good. This is so obvious, but some narrow minded jerks in Washington just don't get it. They are anti-middle class, no matter what they preach. The insatiable need to foolishly spend more tax dollars needs to be halted!
    10 Jul 2012, 04:27 PM Reply Like
  • concertmasters@sympatico.ca
    , contributor
    Comment (1) | Send Message
     
    All U.S. citizens are required to pay taxes on income earned anywhere on the planet, even on the moon and Mars, I am sure. It seems that companies are not considered to be U.S. citizens in that respect. But in reality U.S. taxes generally apply only to the extent that the U.S. tax rate is higher than the foreign tax rate already paid. You can be sure that corporations will be able to deduct every legitimate expense - and then some. So no need to weep for these bloated, exploitative corporations with no regard for the environment, the planet, working conditions or anything but their bottom line having to pay some taxes on bringing profits home. Money is desperately needed for infrastructure, scientific research, environmental concerns and well-being of our citizenry, and you want it all to come out of the pockets of people earning $15/hour and less? And you want to cut every program which makes their life a little better and improves our country's health, scientific knowledge, culture, art and education? Shame on you.
    10 Jul 2012, 05:09 PM Reply Like
  • RDSwindells
    , contributor
    Comments (18) | Send Message
     
    If you are going to comment and complain about companies that earn funds overseas, paying local income taxes on the earnings at point of earning, and not repatriatging the funds to the USA beacause Uble Sugar wants to attach additional taxes in contrary practice to virtually all other coountries, then please use a US email address. I can assure you that Canada does not handle expatriate earnings and taxation in the same manner.
    10 Jul 2012, 08:59 PM Reply Like
  • minwyhe
    , contributor
    Comments (103) | Send Message
     
    The conservatives blame everyone and everything for our deficits from taxes to regulation to government social programs, etc. Let's begin to hold the corporation accountable for their part in this malaise. They are holding a lot of idle cash both at home and abroad which could be used to create jobs. Jobs create demand which in turn creates profits. Until we get people working which tax cuts to the wealthy do not provide (check what happened with the Bush tax cuts prior to the war he manufactured), our economy will remain stagnant. We should be taxing this money held by corporations in offshore bank accounts (ala Romney), the only part of this money being taxed is the earning made on the money.
    10 Jul 2012, 06:04 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    "Jobs create demand which in turn creates profits".

     

    What business school did you go to? Back in the seventies Chrysler kept their assembly lines rolling and their employees paid while car lots backed up with unsold inventory. Iacocca had to get a government loan to rescue Chrysler from bankruptcy and closing down and then practically gave that excess inventory away (drove down the prices of the other car companies also). If there is no demand, you don't need any employees. And if the government is just going to give money to people to spend, those people don't need jobs. You're on a one-way street that leads to a dead end. We probably need a different way of calculating tax for multi-nationals. The three factor formula used by the states for determining corporate income might be a good starting point.
    10 Jul 2012, 10:24 PM Reply Like
  • Hawkeyes 2011
    , contributor
    Comments (269) | Send Message
     
    So, why don't we just "Nationalize" everything like Mother Russia tried to do? The answer is because it does not work anyway you look at it. Russia, in essence, went bankrupt and was forced to come back out as the Soviet Union with focus on growth and opportunities for its citizens to "learn and earn" with some personal dignity. Capital (ie; cash ) whether personal or business is needed in our economy so that growth can be produced by a working individual. People that work are happier because they have pride in supporting themselves (buying stuff, saving, investing, etc.)and their families. Expanding governments through even higher taxation is a sure recipe for economic failure.
    10 Jul 2012, 06:13 PM Reply Like
  • Dr Fred
    , contributor
    Comments (71) | Send Message
     
    How about this solution?
    Allow these corporations to bring back their overseas profits.
    Calculate the tax that would be due
    Pay some portion (20% ?) to the government
    Allow the other (80%) to be used in a manner directly to increase job development within one yr or pay the remaining tax

     

    This would be a good deal for the government, the unemployed, and for the company. (Just don't let the "tree- huggers" get involved in the job development)
    10 Jul 2012, 06:20 PM Reply Like
  • Frangrant
    , contributor
    Comment (1) | Send Message
     
    Why don't the companies use overseas money to pay dividends or buy back stock? Wouldn't that action be exempt from an additional US tax?
    10 Jul 2012, 10:40 PM Reply Like
  • ConservativeOutperformer
    , contributor
    Comments (541) | Send Message
     
    The only thing these comments show is why we are stuck with the politicians we have...... People actually think AAPL earned that money overseas and is now being "penalized" for not repatriating it...... Yea, I can totally see how international operations are infinitely more profitable than doing business here in the U.S. Makes perfect sense............... Hilarious.

     

    You guys should add in some common sense and/or light reading on transfer pricing in between your Bill O'Reilly episodes.

     

    Good luck!
    10 Jul 2012, 11:36 PM Reply Like
  • Diveanddig
    , contributor
    Comments (33) | Send Message
     
    We need some clear thinking here. Apple products are manufactured overseas and sold overseas. Of course they made those earnings overseas. The product never crossed our borders. Their headquarters is located in the USA. Maybe the best solution for these "greedy" capitalists is to move their headquarters overseas - not.

     

    Leftist thinking always relies on government for solutions instead of letting market forces find the best solution. Imagine letting our really stupid government intellectuals decide the best way to allocate our taxes. They have created the mess and eventual bankruptcy the western world is facing now. Show me one socialist government that has thrived over the centuries. They always collapse for lack of funds, and the folks who suffer the most are the lower and middle class. Socialism eventually crushes the middle and lower class. When the takers outnumber the contributors we end up with the same situation Madoff created. i.e. - When income (taxes) does not cover obligations (government spending). Now we are able to borrow the difference, and the next step is to just create the money out of thin air. They call it Quantitative Easing (QE). This is the path every government has taken when faced with this situation over the centuries. That is a hidden tax that crushes the poor and middle class. Eventually they run out of other people's money.
    11 Jul 2012, 01:55 PM Reply Like
  • ConservativeOutperformer
    , contributor
    Comments (541) | Send Message
     
    You managed to humiliate yourself inside of two sentences.

     

    Congratulations.
    11 Jul 2012, 02:59 PM Reply Like
  • Hawkeyes 2011
    , contributor
    Comments (269) | Send Message
     
    Very solid Diveanddig !!! I have noticed over the years that Governments are very good at spending other people's money because they somehow feel they are "smarter" than us citizens. I think that most people in the U.S. just want a much smaller national government and a more effective state and local government. Let's try smaller government and get back to having people succeed or fail based on merits (work ethics, desire, passion, education and real skills,etc.) . I say "learn and earn" is a fair approach. Let's have our governments provide basic frameworks and leave the economy to the people. We need to get back our leaders being involved in the real economy and not having politicians as our leaders. WOW...I feel better now.
    11 Jul 2012, 03:16 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    But how can you knock "free money" from things like government grants to schools to conduct "studies" of important subjects like (you name it).
    :-(

     

    O.K. I'll name one. Global warming of a billion year old planet based on a few hundred years of information.
    11 Jul 2012, 05:09 PM Reply Like
  • skipper111
    , contributor
    Comments (3) | Send Message
     
    If Rommney had gotten fair taxation on the companies he outsourced overseas then there would be less of that . That goes for other corps based here but moving manufacturing abroad . With wages rising overseas and elsewhere it would make it even more attractive to move mfg. back home . I do not understand why offshore mfg. , should be taxed anyway . The money is not earned here but tariffs still apply . If our President knew anything about business , not just taxes ,the taxes would be lowered and more competitive . Anyone knows that lower taxes encourages growth , more jobs and THEN more taxes . Let 'em bring the money home ! How does stealing from the " rich " and giving it to the poor create or motivate anyone to get an education and a job.
    11 Jul 2012, 03:51 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|