“On Thursday afternoon, Apple noted in an SEC filing that it was issuing $7 billion worth of new bonds,” Matt Rosoff writes for CNBC. “Apple generates cash flows of nearly $40 billion every six months. It’s the richest company in the world, with more than $256.8 billion in cash and marketable securities sitting on its books. Why does such a rich company have to borrow money?”
Rosoff writes, “CEO Tim Cook gave a clue in his interview with CNBC ‘Mad Money’ host Jim Cramer last week… ‘If you sell globally, you earn money globally. If you earn money globally, you can’t bring it back into the United States unless you pay 35 percent plus your state tax. And you look at this and you go, ‘This is kind of bizarre.’ You want people to use this money in the United States to invest more. We are in a good position, but an unusual one. Our good position is we can borrow. And so to invest in the United States, we have to borrow. This doesn’t make sense on a broad basis…'”
Rosoff writes, “Changing the tax policy on repatriated funds is one of the areas that President Trump and congressional Republicans have talked about fixing.”
Read more in the full article here.
MacDailyNews Take: Obviously, the U.S. needs tax reform desperately.
Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
SEE ALSO:
Apple borrows billions while sitting on massive overseas cash mountain – May 10, 2017
Why Apple is investing $148 billion in corporate debt – May 4, 2017
President Trump’s tax reform plan includes deep cuts in corporate taxes – April 26, 2017
Apple raises $10 billion in debt ahead of President Trump’s repatriation tax plans – February 3, 2017
After Apple’s blowout earnings, the Street looks toward ‘iPhone X’ and President Trump’s tax reforms – February 3, 2017
President-elect Trump’s corporate tax reform expected to have some positive impact on Apple EPS – January 14, 2017
Apple has now amassed nearly $80 billion in debt – September 12, 2016
I’m sure Apple will get by 🙂 There’s a LOT of people trying to find ways of getting themselves a chunk of Apple’s money for free. And if the government can help them do that, they see that as ok.
I sense a bit of hypocracy.
Apple charges Apps Store vendors 30% fee on sales of all apps and in app purchases. They do this because Apple invested in the infrastructure the app’s authors depend on for those sales. This is mostly agreed upon, noting some big players dispute the evaluation of 30% or the charge at all.
America is similar to the App Store, providing the infrastructure in which to execute the functions of commerce. A percentage of income or profits that benefit from the infrastructure, size and weight, mass of American negotiating might, is a commonly acceptable methods to compensate the state and other local governments for making it possible for Apple to exist and prosper. These same agencies also make it possible for Apple to not function. Case in point, India and China. Their rules can stifle commerse.
I suggest Apple does not “HAVE” to take out bonds, but chooses to do so. They can just as easily repatriate their foreign borne funds back to America, at the highest rate, which in turn supports further investment in US infrastructure that benefits Apple and the community they depend on.
We live in a fishbowl, not isolated compartments. We depend on each other.
I am not saying Apple is wrong or taxes is wrong. What I am saying, Apple and others are beIng hypocritical none the less. We all pays something, we all benefit something.
Most Americans and local business’s pay 30-35%, Apple doesn’t have to go into debt, stop buying back the stock, IBM may need to buyback their stock, but Apple doesn’t.
It’s one thing for Apple to say that the profits they make selling in China shouldn’t be taxed in the United States. But how much of Apple’s billions were actually made here in the US, but are funneled through their sham holding company in Ireland to avoid tax liability?
I don’t fault Apple’s desire to pay as little tax as possible. We all do that (or else we’re crazy). The difference is, most of us don’t have the luxury of structuring our income through a foreign entity, or use any of the perfectly legal strategies available to corporations and the 1 percent. Which is why Warren Buffet could famously claim he paid a lower tax rate than his assistant…
http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/
Yes, Apple does or did charge 30%, hm, for infrastructure and the like. Wonder why they don’t think they should pay the US government a similar amount if not more. Surely the government provides more than what apple provides those developers.
Well of course everyone wants a big old tax cut, because that’s what people with a lot of money and a lot of influence keep telling you over and over and over.
So why don’t they show the evidence to prove that a tax cut actually stimulates the economy, trickling down from those benevelent corporate cash hoards that seem to like to sit on money no matter what the tax rate is at their little tax haven.
Let’s remember that in 1981 Reagan cut taxes, then quickly thereafter had to raise taxes to cover the dramatic shortfall in revenue to cover his bloated military expansion, then he did a nice little mini cut to rates in 1986 to goose the midterm election … which handed his successor Bush Senior a nice little recession and budget shortfall that resulted in Bush having no choice but to reverse his “read my lips” pledge in 1990.
In 1993, Clinton pushed through a budget agreement that both limited spending and raised the marginal rates on the rich. The result was an average of 4% growth per year for 5 straight years.
George Dubya Bush tried to cut taxes and use massive deficit spending to goose the economy after the 2001 disaster, and he failed. Instead the tax cuts, massive government expansions with Homeland Security and other fiscal mismanagement led to massive debts and the biggest recession in 2 generations.
Obama, interestingly, did not increase your taxes but you still blamed him for not achieving insane growth as the nation slowly recovered from the financial meltdown of 2008-2009. Corporations have never held more money or paid a lower share of taxes to fund the nation’s infrastructure.
Now that the Trump administration has sold you on the false promise that he can deliver GDP growth rates that the nation hasn’t seen since 1998 while dramatically increasing defense spending, shutting down travel and trade, and slashing tax revenues that fund our nation.
Ask yourself: when did such a reckless fiscal plan result in widespread economic prosperity? Think people. Progressive taxation that incentivizes people/corporations to stop hoarding money is the only way to get economic cash flowing everywhere. Think about it. Why would asking those with huge accrued wealth need a tax break?
I know what you are thinking: “But but but if we cut taxes then I will have more money in my pocket to spend too!!!” Okay, show us your math. When Trump claims he’s going to unleash all this exciting growth, sending the federal debt soaring by tossing out a trillion dollars in lost federal revenue, and you spend every dime of it immediately, then what percentage gain does the economy realize? I’ll tell you: 2.5% short term growth about current growth levels, minus the treasury rate of interest repayments that you and I shmuck taxpayers now have to pay back with interest. So I predict the followup, you will say: “but interest rates are at record lows, it’s a great time to borrow money.” Okay, but if you think the USA is going to pay back all its accrued debts at the current market rate, you would be mistaken. Rich money holders are clamoring for the Fed to jack up interest rates so they can make more money lending it to the government and to consumers. And the idiot president is letting them do so, with no regulations of oversight to protect the consumer from unscrupulous lenders.
It feels like 2000 all over again, with another financial dimwit in the White House and Goldman Sachs running the treasury, and congress off gerrymandering their districts for the next corrupt election.
Please vote more wisely next time. Put in a libertarian or a Bernie Sanders who is not beholden to Wall Street. The tax cuts the current liar in chief are offering are no guarantee of economic prosperity. Just look how well voodoo economics worked in the past.
WRONG! The Clinton ERA RUINED MY DESIGN BUSINESS!!! TAXED ME OUT OF BUSINESS IN FLORIDA!!! You clueless FCK!
If your business didn’t prosper in the 1990s then we are all sorry. You are the only one ive ever heard who didn’t cash in big time in the dotcom gold rush.
PS. iWorked for AAPL in 1990-1991….. Broke out on my OWN due to the FACT Apple’s COMPUTERS were FAR SUPERIOR to ANY PC O Shite on the market @ That time.
PSS>!!!! iHad 12 EMPLOYEES iHad TO LAY OFF!!! .!.. UP YOURS!!
PSSSS!!! Our AMERICA DEFENSE projects DRIED UP in 1997 thru 2000!!! The final STRAW on “THE CAMELS BACK” was when the PLANES HIT OUR TOWERS IN NYC!!!! iHad a CONTRACT with the FAA!!!!! That CONTRACT BECAME NULL AND VOID AFTER THAT ATTACK!!! YOU “PAUL” Have NFC!!!… YOU PAUL!! are THE Problem NOT The Solution.
GET THE FCK OUT OF MY COUNTRY PAUL!! & Go back to your under dwelling HOLE from which you CAME!!
Wait a minute, I read the rest of your hateful comments. I see why people don’t want to do business with you, and why you couldn’t hack it at apple. Not sorry.
Unlike you, I recognize that “freedom isn’t free”. I pay more than my share of taxes proudly. Sounds like Paul does to. Why are you whining, tax rates are already near historic lows.
or you know, just pay your taxes like every customer who ponies up for a new iPhone each year and pays the “Apple Tax” for a premium laptop or desktop. i’m happy to pay more for the quality. how hard is it to pay your own fair share, Timbo?
They did it with the intent of getting Wall Street off their backs. That strategy turned the scenario. But it is time to end the stupidity. You do not purposely put yourself in harm’s way.