Apple Announces Plans to Initiate Dividend and Share Repurchase Program

[TallManNY]

This is absolutely false.

Yes, I went a bit far. What I meant to say is that you hear about many of the wealthy with a tax rate just north of 15% and for the super wealthy in a good year it can approach whatever the capital gains rate is, which is currently 15%.

Quote: "Yes, there is a class war, Warren Buffett once said, and my class is winning. The IRS study of taxes paid in 2007 makes his point. The top 1% of taxpayers averaged about $138 million in income, and paid taxes at a rate of 16.6%."

http://ourfuture.org/blog-entry/2010020718/top-1-lower-tax-rate-their-secretaries

But it takes a good year with lots of stock winnings and hedge fund fees earned for capital gains to be the majority of the rich's income. In the recession or even in a normal year, the rich didn't have such big gains and so more of their income was likely to be of the normal wages income which gets taxed at 35% for the most part for the rich.

In 2009, things evened out a bit. See the table at the bottom of the link. It has the 1% taxed at 24%. It is a much higher rate than most people, but still much below the 35% the normal income tax rate would impose.

http://www.taxfoundation.org/news/show/250.html

----------

Remember about 71% of outstanding shares are being held by institutions so roughly $3B will be paid out to individuals holding direct shares.

But there are at least a few folks like me.
See my signature line.

----------

Apple generates $10 billion of free cash flow every quarter. They just announced that they will distribute $10 billion per year and spend another $10 billion over the next 3 years on buybacks. They will still be generating a lot of cash that they can use to invest in new product development.

The free cash flow that we have seen and which is projected is AFTER their normal and already huge expenditures in product development. Remember they developed the iPhone before they started generating tons of cash and the iPad while generating tons of cash. The $10 billion in buybacks is supposed to be used for shares that will be given to employees, so there is a large amount of your employee costs right there. There really is no reason to think that Apple won't finish 2012 or 2013 with a much larger bank account than they have now even taking into account these dividends and buybacks.

 

[twoodcc]

been a while since apple gave a dividend. i was hoping they'd buy twitter or something

 

[KPOM]

been a while since apple gave a dividend. i was hoping they'd buy twitter or something

Apple's cash holdings are worth more than all but 52 public companies in the US. They can distribute $45 billion over the next 3 years and still watch their cash pile grow.

 

[KPOM]

Well the Republican Party wouldn't mind it if dividends were tax free. The double taxation argument is one that Presidential Candidate Mitt Romney makes. But they are not, they are taxed as capital gains, which is currently taxed at 15%. Incidentally, since most income for the wealthy in the U.S. is capital gains, this is why you hear complaints that the wealthy's tax rate is only about 15% overall. If capital gains weren't taxed (based on the double taxation argument), the wealthy would have their tax rate reduced to near zero. Mitt Romney released his tax records for last year and the $40 or so million he made was taxed at a rate just above 15% because it was mainly capital gains (technically, a form of income called Carried Interest").

Unfortunately our tax system is so complicated it makes it easy for politicians on both sides to demagogue by selectively pointing to "facts" and "statistics." The reality is quite nuanced.

As it stands, the US actually does have a very progressive income tax system compared to Europe in that the US is dependent upon the wealthy for a disproportionately high percentage of taxes. The main reason isn't so much that tax rates on the wealthy are high (they aren't - at least compared to Europe), but rates on the middle and lower classes are remarkably low.

That said, we have a really unusual system in which the highest marginal and effective rates are often paid by the "almost rich." Call them the "2-10%ers" if you will. They are people in the low- to mid- 6 figures, who earn too much to qualify for tax breaks for the middle class, but don't have enough wealth to generate tax-advantaged capital gains. A lot of owners of small businesses fall into this category.

Unfortunately, because it is difficult to lower taxes on this "almost rich" class without also benefitting the very wealthy, it's also difficult to change this. Apple basically blamed the US tax code for the reason why the dividend wasn't bigger. They clearly did not want to repatriate income (taxed at 35%) in order to fund dividends, which reduced their vaunted $100 billion cash hoard to about $38 billion. The issue here is that the US is one of the only countries that taxes worldwide income. For individuals, only about $97,000 is exempt from potential double-taxation (though you can usually take a credit against foreign tax paid). The effect of taxing worldwide income can be very burdensome to the "almost rich" living outside the US (often middle managers of big companies there temporarily).

 

[Cybbe]

They still pay taxes on all income that is generated within each of those countries, the only difference is that they can move it to another with the EU without being tax again.

Edit: Someone is an idiot that does not understand how it all works eh? must be an American.

You stupid ****. Look up the Irish and Luxembourg tax code please.

 

[twoodcc]

Apple's cash holdings are worth more than all but 52 public companies in the US. They can distribute $45 billion over the next 3 years and still watch their cash pile grow.

i don't disagree. but i would like to see apple buy something like twitter