Tim Cook "Not Religious" About Holding Cash; 66% of Apple's $81B in Cash is Held Overseas

[thekev]

Are you saying companies like intel and apple haven't reinvested back into this country.
Intel has invested over $15 billion in new fabs over the last 8 years and more to come with the announcement of fab 42 and a new development fab in oregon. Someone has to work in these fabs as well as support the infrastructure.
apple has opened a number of stores, created high demand products and have created jobs at many retail outlets and supporting infrastructe.

Why should we care about what other countries tax corporations.

Bring the money back here and invest here.

First off this isn't about one company. Intel does in fact do a lot within the US. You're right about that. This is concerning the ability of a tax holiday to increase investment spending. Incurring costs within the US tends to shift their tax liability anyway. Second consider the points made by Papajohn about US corporations shifting money offshore to avoid US taxes. This means with a tax holiday every few years they can avoid the majority of their tax liability indefinitely by taking advantage of such tax havens. Regarding other countries some of them charge a lower tax rate on foreign income but assess the liability regardless of whether the company intends to repatriate the funds at all. We're talking about profitable blue chip companies here. Paying off their tax liability will not make them unprofitable.

One of the biggest problems with the current tax system is that it does a very poor job of enforcing corporate payment. They can push as much income as possible out of the US and with the precedence they're trying to create, wait for a tax holiday to repatriate the funds.

 

[Mak47]

What a joke Apple are and half the posters here.
I pay taxes...so why not these fat cats.

We all pay taxes in one way or another. Corporate taxes are a different story. Whatever they pay in the form of taxes will be passed on to their customers in the form of higher prices. There is no escaping this. Companies price their products based on the cost incurred to make them, taxes are one of those costs.

They wil pay themselves a huge amount and the rest will go to foreign concerns...read China.

Define "they"? I assume you mean the company executives. If so, then the income they give themselves will be taxed under standard US income tax laws. The government will get it and use it to build some more bombs to drop on third world countries, or bail out some banks. You will see no benefit from it.

As for the second point about it going to China...The money is already offshore, there would be no need to repatriate it if its going to be spent in China.

Amazing how companies like Apple want to use our roads, police force etc etc but sure don't like paying their fair share.

Roads are paid for with a combination of gasoline taxes and other state and local taxes. Not one single penny of anything that would be paid from repatriation would be used for that purpose. Beyond that, Apple the large business entity, does not use roads. Its employees use roads and the companies that ship its products use roads. All of those employees pay individual taxes as described above. The purchase of gasoline pays the rest.

Police are supported by local government and local taxes. Neither of those are at issue here. State police are supported by State taxes, again, not at issue.

And again, in the end, those of us who buy their products are the ones who really pay the taxes anyway.

 

[DrRadon]

It's too bad that the American tax system incentivises not bringing the money back into the United States.

Back? Whats there to bring back from a product manufactured in asia and soled in the eu?

 

[cerote]

Would be nice if Apple, oh, um, reinstate their charitable gift programs. Sheeez...talk about being cheap. Apple, seemingly, doesn't give a penny to charity. How hard would it be to give a million bucks a year (given their huge cash reserve) to something like Cancer research or a few childrens' hospitals, or whatever...and ALSO have some kind of matching program (like 99% of other companies larger than 1000 employees) that allows employees to donate money to a worthy cause and Apple will match it, say, up to $200.

Not eveybody cares to brag about what the donate or give to charities. Some people don't do it to get attention and prefer to not have it public at all.

But Apple gives sometimes too: http://www.google.com/search?q=appl....,cf.osb&fp=fe49d561ad75bea3&biw=1152&bih=669

Just look over a few pages and see the different things it gave to.

 

[malachiman]

As much as I like my apple products being cheap (or cheaper than what they could otherwise be), I'd rather paying a higher price knowing that the money was going back to helping Americans in some shape or form be it in a tax that provides people food stamps or directly into the hands of assemblers.

Forgetting that Apple sells products internationally.

Those of us in New Zealand already pay a huge premium. Basically it would be unaffordable if they were built in the states.

 

[flopticalcube]

A company so full of great ideas and they can't figure out what to do with $80b?

 

[RedRallyeZ]

just like we give tax breaks to say BMW for building cars in NC.

South Carolina. Greer, South Carolina to be exact. And we are daggum proud of it.

Don't make that mistake again, haha.

 

[papajohn]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A334 Safari/7534.48.3)

Apple pays their fair share every payroll. They keep tens of thousands of employees in this country even while companies like IBM outsource most of their jobs. Why should Apple pay more tax? So the government can give the money to another Solyndra or two?

What does payroll taxes have to do with capital gains? Again, please stop acting like sheep and blindly repeat the tea-party soundbites. It's OK to do your own research before you speak (or write).

For the record, the Energy Department’s loan-guarantee program, enacted in 2005 with bipartisan support, has backed nearly $38 billion in loans for 40 projects around the country. Solyndra represents just 1.3 percent of that portfolio — and, as yet, it’s the only loan that has soured.

Apple is not the only company spending dollars on lobbyists to get this tax holiday passed. Do you believe Google, Microsoft, Pfizer, Qualcomm will suddenly stop using cheap labor overseas and shift their operations back to the United States, just to be nice?

Tax holidays do not add jobs to the economy. They do exactly the opposite.

 

[musika]

"religious about holding or not holding cash," but Apple would continually ask ourselves what is in Apple's best interest and act accordingly.

Huh? Do you guys pay your staff for this kind of poor writing? Doesn't make for a great experience for the reader. I wouldn't put my name on this.

 

[moore2772]

Give us a dividend!

As an Apple stockholder (who bought at 8 1/2...) I'd like to see a dividend. Companies with a lot less cash on hand than that pay dividends.

 

[ps45]

I don't know why this is even a story. Cook didn't say anything that hasn't come out of Apple before. At least you didn't bring up speculation on a dividend.

Perhaps they are testing the water again. The political climate over this type of thing may have changed, and may be changing by the minute. Apple are a consumer-facing company, and it's possible they're wondering whether in the eyes of consumers their 'liberal arts' cool may begin looking a bit 'conservative corporation.'

 

[Bubba Satori]

So you would rather they not pay taxes on earnings?

Would you be willing to pay a lot more for your iToy to pay those taxes?
Companies don't pay taxes.
The purchasers of their products do.

Bottom line, would you pay 20-30% more for companies that don't
attempt to minimize their tax exposure like any well run company should?

Yes or no.

 

[igazza]

Those of us in New Zealand already pay a huge premium.

Most of that is your government, they will charge import tax etc..

 

[JoeG4]

[/COLOR]
Is This Good for the Company? by niallkennedy, on Flickr

My response, and I do think it's informative.

 

[thekev]

Would you be willing to pay a lot more for your iToy to pay those taxes?
Companies don't pay taxes.
The purchasers of their products do.

Bottom line, would you pay 20-30% more for companies that don't
attempt to minimize their tax exposure like any well run company should?

Yes or no.

Whenever this comes up someone always mentions product inflation. This is Apple. They charge what they want to and their margins are great enough to where they have a little room to maneuver in terms of product pricing tiers. If the pricing goes above what people will pay, they stop buying itoys.

This isn't just for Apple anyway. It's for all of these companies. The ability shove tax liability off the table shouldn't even exist and it's just a broken concept. If fixing that causes a temporary inflation on luxury devices it won't do any real long term economic damage. For the most part I think people will grumble and buy it anyway.

 

[WestonHarvey1]

The United States has the second highest corporate tax rate in the world, just behind Japan. If the tax rate were low, companies wouldn't bother with all these shelters. Who knows, we might actually get more tax revenue out of it.

 

[tetravus]

So you would rather they not pay taxes on earnings?

If that money is earned outside the United States, why should they? The products are built somewhere else, sold somewhere else, and money collected somewhere else. All these would already be taxed in countries where these activities are happening. Why should they bring the money into the states to face another round of taxes? That's double taxation.

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Whenever this comes up someone always mentions product inflation. This is Apple. They charge what they want to and their margins are great enough to where they have a little room to maneuver in terms of product pricing tiers. If the pricing goes above what people will pay, they stop buying itoys.

This isn't just for Apple anyway. It's for all of these companies. The ability shove tax liability off the table shouldn't even exist and it's just a broken concept. If fixing that causes a temporary inflation on luxury devices it won't do any real long term economic damage. For the most part I think people will grumble and buy it anyway.

This isn't just about Apple, this is competition between countries. Because the USA has such high tax rates; it's only natural that companies try to go to places where taxes are lower. The reason things are looking bad is because America is no longer competitive. Taxes are high, utility costs are high, transport costs are high, labor costs are high, too many laws and regulations and too many unions who want to be paid high but don't want to do equivalent work. With these conditions, which sane businessman would like to setup shop in the states? Won't it be natural to just move somewhere more attractive if you have a choice?

 

[SolRayz]

We all tout Apple as a company that revolutionizes everything they touch... maybe it's time for Apple to not be "every company" in terms of bringing money back to the US economy?

Agreed...but we also have to discuss the "big elephant in the room". HOW ABOUT BRINGING MANUFACTURING BACK TO AMERICA!!!

wouldn't have $81 billion if it weren't for Chinese labor.

Thank you China...

 

[Chupa Chupa]

As an Apple stockholder (who bought at 8 1/2...) I'd like to see a dividend. Companies with a lot less cash on hand than that pay dividends.

Seems shortsighted. I understand why the institutional shareholders (pension funds, mutual funds, etc) would like a dividend but I don't understand why an individual shareholder would care about puny dividend given that Apple has been using its cash stockpile as leverage to get parts at lower cost thereby making devices less expensive and growing the company. I'll take AAPL's ride to $500+ rather than a stagnant share price and a $100 quarterly dividend check.

Agreed...but we also have to discuss the "big elephant in the room". HOW ABOUT BRINGING MANUFACTURING BACK TO AMERICA!!!

wouldn't have $81 billion if it weren't for Chinese labor.

Thank you China...

Fair enough, but then you have to discuss that other big elephant in the room -- what were the underlying reasons U.S. companies shuttered their U.S. factories and went overseas. Are employees going to work for Chinese labor and benefits? Are govt's going to lower regulations, tax rates, and red tape? Are consumers going to pay 25% more for U.S. made goods -- like a $625 16GB iPad (before sales tax) or a $2000 low end 15" MBP (before taxes)?

 

[faustfire]

The United States has the second highest corporate tax rate in the world, just behind Japan. If the tax rate were low, companies wouldn't bother with all these shelters. Who knows, we might actually get more tax revenue out of it.

There's a big difference between the official corporate tax rate and the effective corporate tax rate.

Twelve Corporations Pay Effective Tax Rate of Negative 1.5% on $171 Billion in Profits; Reap $62.4 Billion in Tax Subsidies

 

[KPOM]

Companies can easily solve this problem. Apple can move to Botswana, nobody is stopping them.

They could move to Grand Cayman or Bermuda. Some have.

 

[papajohn]

If that money is earned outside the United States, why should they? The products are built somewhere else, sold somewhere else, and money collected somewhere else. All these would already be taxed in countries where these activities are happening. Why should they bring the money into the states to face another round of taxes? That's double taxation.

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This isn't just about Apple, this is competition between countries. Because the USA has such high tax rates; it's only natural that companies try to go to places where taxes are lower. The reason things are looking bad is because America is no longer competitive. Taxes are high, utility costs are high, transport costs are high, labor costs are high, too many laws and regulations and too many unions who want to be paid high but don't want to do equivalent work. With these conditions, which sane businessman would like to setup shop in the states? Won't it be natural to just move somewhere more attractive if you have a choice?

Exactly. This "tax holiday" is about taxing these corporations the first time. It about taxing earnings that are done here in America, but then sent overseas in anticipation of a tax holiday? Shouldn't those earnings be taxed like those of you and I and the pizza joint down the street? Is there a reason wealthy corporations should be taxed at only the proposed 5-8% while the REST OF THE WORLD (and the rest of us) get taxed at a far greater rate?? Clearly the process did not work in 2004 and it's killed jobs ever since (when was the last time you reached a customer service rep based in the United States?).

 

[SolRayz]

Seems shortsighted. I understand why the institutional shareholders (pension funds, mutual funds, etc) would like a dividend but I don't understand why an individual shareholder would care about puny dividend given that Apple has been using its cash stockpile as leverage to get parts at lower cost thereby making devices less expensive and growing the company. I'll take AAPL's ride to $500+ rather than a stagnant share price and a $100 quarterly dividend check.



Fair enough, but then you have to discuss that other big elephant in the room -- what were the underlying reasons U.S. companies shuttered their U.S. factories and went overseas. Are employees going to work for Chinese labor and benefits? Are govt's going to lower regulations, tax rates, and red tape? Are consumers going to pay 25% more for U.S. made goods -- like a $625 16GB iPad (before sales tax) or a $2000 low end 15" MBP (before taxes)?

I don't man...all I do know is that we used to manufacture goods in this country and we were just fine.

 

[ericinboston]

Not eveybody cares to brag about what the donate or give to charities. Some people don't do it to get attention and prefer to not have it public at all.

But Apple gives sometimes too: http://www.google.com/search?q=appl....,cf.osb&fp=fe49d561ad75bea3&biw=1152&bih=669

Just look over a few pages and see the different things it gave to.

Um....$250k in 1987. Thanks, Apple.

As for the 9000 free iPads...whatever...might as well have given away iPods or free copies of OSX.

You do realize that giving away PRODUCT is a big write-off for them...and also considered a "promo" or other marketing jargon that gets buried in the budgets.

I appreciate your reply, but I still think Apple is extremely stingy.

 

[435713]

"religious about holding or not holding cash," but Apple would continually ask ourselves what is in Apple's best interest and act accordingly.

Huh? Do you guys pay your staff for this kind of poor writing? Doesn't make for a great experience for the reader. I wouldn't put my name on this.

Picky. Technically that is fine. Grammar is always all over the place anyways. Best-sellers and articles will always have some tsk tsk stuff.