Apple’s showdown with the U.S. government over taxes on offshore cash

“Apple’s cash hoard is roaring, especially overseas. According to a recent report, Apple has $74 billion in overseas cash, up from $64 billion just 7 months ago and $35 billion in 2010,” Calpurnia writes for Seeking Alpha. “And Apple is not the only one. Other companies are continuing to build large piles of cash overseas. Microsoft has $50 billion, Cisco $42.3 billion, Oracle $25.1 billion, and Qualcomm $16.5 billion.”

“These hoards represent a showdown between the large multinational corporations and the government over taxes,” Calpurnia writes. “US tax law requires that earnings of domestic corporations to be taxed domestically, even if those earnings are earned outside the US. Currently, the law ‘allows them to defer taxes on their profits from international operations until they bring the cash back to the U.S.,’ writes Justin Fox in a in his analysis of tax implications of overseas corporate cash hoards.”

Calpurnia writes, “Apple is pushing for a change in policy. In a recent earnings conference call, Apple CFO Peter Oppenheimer states: ‘Repatriating the cash from offshore would result in significant tax consequences under current U.S. law. We have expressed our views with Congress and the administration. We think that the current tax laws provide a considerable economic disincentive to U.S. companies that might otherwise repatriate the substantial amount of foreign cash that they have. And that’s our view, and we’ve expressed it.’ …Don’t expect Apple to give up any time soon. With this being an election year, it could pay for Apple to wait for a change in policy.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Carl H.” for the heads up.]

Related articles:
Apple‘s $74 billion tops list of U.S. tech companies’ overseas cash – July 9, 2012
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011

58 Comments

  1. I love this: so Congress accepts the gifts, bribes, incentives… of lobbyists to change tax policy so that they can stash billions offshore, tax free, then, bowing to populist indignation, feigns outrage that corporations are allowed to stash billions offshore tax free. Jeez.

    1. tax free? Are you really dim enough to think that other countries don’t tax Apple?

      I hope your head injury heals enough for you to function in society.

      Are there other countries that do this double taxation when a company makes money outside of the country, pays taxes on it in that country, brings the money home and gets hit again with taxes?

      The whole idea the US government feels that companies owe US taxes on products sold outside the US is outrageous. Pure theft and anyone who thinks Apple should double pay on taxes is part of the problem.

      The world is full of mindless socialistic idiots who feel that everyone owes them something.

      1. The taxable portion of that cash hoard is merely the difference between US taxes and foreign taxes. So Apple can repatriate money from Japan anytime because Japan’s corporate tax rate at 40% is higher than our 35%. Whereas on money brought it from, say, Britain, they would pay 5%, or the difference between our 35% and their 30%. What these companies including Apple, and the pther whiners, want is a temporary drop in the tax rate so they can repatriate the money without paying any taxes whatsoever (as happened in 2004).

        1. Any ADDITIONAL taxes, there I fixed it for ya

          Apple (and every other multinational BTW) want a discount (not free) in the rate if congress wants them to bring foreign made money into the US.

          The money was made in another country, why does the US congress think they have “dibs” on multinational corporate profits (even if those profits were made overseas) just because the company was founded (or has it’s headquarters in) the US?

          If Apple makes money in china shouldn’t it be permitted to keep it (in china) and invest the money back into say, production facilities or building stores?

          Or do you liberal ‘Mericans just think you are entitled to a piece of -everyone’s- money?

      2. Au contraire!
        The world is full of people who fail to realize that without the fact that humans are social animals, and without collective action of humans there would be no wealth, and no wealthy people.
        IMHO the true “mindless socialistic idiots” are in fact the ones who are members of the 0.01%.
        No man is an island.

  2. I don’t think there can every be any law that would require anyone to pay tax for something someone did in another country. If no cash ever got into America as a result of some commerce, there is nothing to tax. What some company in France, Korea, Brazil or Russia made in profit, and how they were taxed in those particular jurisdictions, is simply beyond reach of tax authorities in any other country, including the US.

    The taxation system in the US is quite interesting. In many respects, the US has lowest taxation than any other developed country (by far), and mostly on every level, from personal income, to estate, to capital gains, to corporate, etc. However, when it comes to taxing US nationals or entities overseas, US has a fairly peculiar and rather unique system that simply doesn’t care if such person or entity already paid relevant local and national taxes for the income / revenue generated overseas to the respective tax authority; the US will continue to demand their tax money regardless, especially if any of (what remained, after taxes were paid on) that revenue was brought into the US.

    I’m curious to see how will the American political audience be divided on this issue…

    1. With the exception of Japan which the US is tied with, the US has the highest corporate tax rate of any country out there at nearly 40%, no other country taxes it’s corporations this high except Japan which is now considering lowering their corporate tax rate.

      1. That 40% percentage is the ‘theoretical’ number, the number that IRS gets is a lot less, maybe 20%. This reminds me of the farmer’s market, where you can negotiate an item for $5 rather than the $10 the farmer was asking for.

        In Germany when they ask 30% corp taxes they get 30% corp taxes, no BS.
        In US some of the largest Corps pay ZERO.

    2. Yep. I once got screwed royally working in Canada but a citizen here in the U.S.. They claim there’s no Double Jeopardy but how do you explain being in a 60% tax bracket total owing here and there? And Revenue Canada even wanted to tax money I made here in the states and it would’ve been even higher! Who am I working for?? Certainly not myself. I also got a Canadian SIN number and paid into their Social Security system for benefits I will never receive!

      1. ya gotta love the canadian tax system. Often you feel like you’re just handing all your cheques over to them. Sometimes I think my name should just be Ben Dover

      1. Honestly, I find it fascinating to see how important the corporate tax rate has become now that we are closing in on a Presidential election. If it were that critical, the why weren’t corporate tax changes pushed through the Republican Presidential/Congressional majority sometime between 2001 and 2006?

        So you want to reduced the corporate tax rate? Fine, just make it a flat rate, apply it to all corporations, and eliminate the writeoffs and loopholes so that they can’t game the system. Because an even more important thing to a company than a one-time tax break Is a stable business environment. Don’t issue an ad hoc tax break if you need to fix a flawed system.

        Then raise the income tax and other tax rates on individuals to make up the difference in overall federal tax revenue. Workers will push for increased salaries to compensate for the increased taxes, and it will all work out about the same in the end.

        Look, we are talking about $208B based on the four companies listed above. On that money, the Feds would net a one-time tax windfall of tens of billions USD – not enough to pay for six months of war or two months of running the DoD. It won’t solve the fundamental problems of this country, and it won’t even reduce the annual U.S. budget deficit by more than 5% or so. There are undoubtedly a number of other countries that would take advantage of the opportunity and increase the one-time tax haul for the Feds. But it wold still only represent a dip in the deficit road for this country.

  3. All of this is old, rehashed arguments. Apple has earned its income and paid local taxes (in many instances higher abroad than in the US) already once. The greedy big spending liberals want to retax it yet again for the privilege to repatriate to the US (if Apple really wants to do that. Why would they).

    Same for US citizens living abroad. They earn local income and have to pay local taxes, almost always higher than in the US. But the US, unlike ANY OTHER INDUSTRIALIZED COUNTRY wants to tax it AGAIN after about 80 thousand bucks. US citizens get NO services for those taxes.

    If someone renounces their US citizenship to avoid double taxation by greedy libs who support these laws I say go ahead. Stop feeding the spending that is ruining the US. And dump that Kenyan fool in November.

    1. Preventing repatriating money by high taxes also prevents the money coming back here to fund more projects and employ more people. Otherwise the temptation is to let the money ride overseas and hire labor there.

    2. This is nothing to do with your so-called “greedy big spending liberals” and your efforts to make it a partisan issue are disingenuous at best and inflammatory at worst. The current law has been the law for decades, under both Republican and Democrat administrations.

      1. It’s not a democrat vs republican issue perhaps but it is a conservative vs liberal issue. Don’t think for a minute that the republican party accurately and faithfully represents the conservative point of view, they certainly don’t now and probably never have.

    3. Look, xx dude. These tax laws have been on the books for a long time. It is NOT a “liberal” issue you nitwit. And the Dems don’t have an exclusive on big spending. Bush and his Congrssional compatriots did a fantastic job of ramping up the U.S. deficit and debt over his two terms.

      If you don’t like the tax laws and believe that you have a superior approach, then by all means advocate it. But don’t spout your partisan bullshit on this forum because there are a lot of people for recognizing it for the worthless garbage that it is. Actually, it is worse than just worthless…it is harmful to this country because it prevents people from engaging in meaningful debate to arrive at a better solution. It freezes the legislative process and locks us into the status quo while some people try to look ahead and others pine for an overly idealized past. Ronald Reagan would think you a fool.

  4. another tax irony. i by a house or a car and pay a tax on that purchase. however, if that property is completely paid off, i still continue to pay a tax for the luxury of owning equity. if i sell that property, i pay a tax on the profits i may earn on that transaction. so i take up front, continue to take it throughout, and take in the end afterwards.

    sounds like a blue film to me.

    1. The taxes have to be paid somehow. Pick your poison. In the end, tax revenues need to match spending. Right now, we need to reduce spending and increase taxes. Otherwise, we are headed for bankruptcy. That’s reality and your griping about taxes won’t change it.

      By the way, your example is somewhat flawed. When you sell your primary residence, a portion of that is excluded from taxation. I believe that tax exclusion benefit renews every two years for a primary residence. Anyway this repeated taxation thing is nothing new – it applies to buying and selling automobiles, for example.

  5. Better to have a little of something then all of nothing.
    So they (meaning the boneheads in Washington) would rather Apple continue to pay other countries their tax dollars.

    This is why they are in politics….because they can’t make it in anything else.

    1. So, does that mean that a polly sci professor is the lowest of the low – “those who can’t do, teach”?

      As a US Citizen living abroad, I must pay taxes on first dollar earned – no matter where on Earth I live. As an Australian Citizen, when living abroad, I do not have to pay any taxes back in Oz.

      As a corporation in Oz, my maximum tax is 30% and I pay 0% on foreign earnings.

      Maybe this is why – currently – Australia has a stronger economy than most other nations in the world.

      Just a thought.

      Should Apple repatriate its cash hoard back to the US?

      In a word: PHUQUE_NO!

      🙂

  6. You all know that this tax bullshit is only going to get worse over the next few years. Since the government, and that includes both Ds and Rs, will never substantially cut spending, they are going to want more taxes to keep the deficit from driving US of the cliff.

    That means Apple doesn’t have a chance of winning the argument with the Feds regarding their overseas earnings. Therefore, if Apple is smart they might plant that new spaceship-like building in Vancouver, BC; Syndey, or Singapore. Actually, if they do that they could redesign the building so it looks like a spaceship in the form of a big middle figure pointed toward DC.

    1. Let’s not forget that Bush junior inherited a $3 Trillion surplus. Deficits need not be a way of life. They just happen if you cut taxes at the same time as starting 2 expensive and never ending wars and throw in the biggest global recession ever.

      1. Bush had a budget surplus based on the government’s annual operating budget. There still was a national debt that was in the trillions already.

        1. According to FactCheck.org, “On the projected surplus, the nonpartisan Congressional Budget Office issued a report in January 2001 — the month Bush took office — that estimated budget surpluses of “$5.6 trillion over the 2002-2011 period,”
          We know how that turned out. When Bush left office, the total DEBT was $10.6 trillion. Every non-partisan economist agrees that the biggest single component of the current deficit is the Bush tax cuts. They disagree as to the exact amount of the deficit attributable to the cuts, but they all agree it’s the biggest single component.

      2. The biggest recession since Jimmy Carter happened 2 years after democrats (socialists) took over power in both sides of the house and senate.

        The expense of the wars did not help the deficit, but the economic collapse happened due to pressure from democrats to force banks to make risky loans to unqualified lower income buyers. This made the banks short term cash but ended up with a catastrophe after a few years.

        Democrats have never taken a luck of responsibility for their part in this collapse preferring to lie and blame it entirely on Bush and his presidency. The media which is entirely controlled by the democratic party also colluded with this acting as the getaway car.

        1. Look, we have had to debunk this housing collapse bullshit before on this forum. The Clinton rules did NOT push bad loans. I read the document. Case closed. This is the at least the third time that I have had to counter your misinformation. If anything, the historically low interest rates during the 2000s combined with the greed of the less regulated banks drove the housing bubble that led to the crisis and collapse. Both parties were culpable in the housing collapse. But I have to put a bit more burden of guilt on the “regulations are evil” party.

          The expense of the wars not only did not “help” the deficit, it added a trillion or more to our accumulated debt and created a large number of terribly wounded veterans who will need a lot of health care for many decades to come. The half trillion of annual DoD spending added another several trillion to the U.S. debt during the 2000s.

          I have no problem in spreading the blame. The problem is that a certain group of people do not want to accept ANY of the blame. I am sick and tired of this crap. In the end, who cares about the blame – we just need to work together to fix the problems. And we also need to share in the sacrifices that will be needed.

          1. Twighlight moon is exactly right. King Mel you are wrong about the housing market. The CRA, Chris Dodd And Barney Frank are responsible for the housing collapse. Go read “housing boom and bust” by Thomas Sowell

          2. “Look, we have had to debunk this housing collapse bullshit before on this forum. The Clinton rules did NOT push bad loans. I read the document. Case closed. This is the at least the third time that I have had to counter your misinformation.”

            You have disagreed with what I said before, fine. But you have hardly countered my ‘misinfirmation’. I don’t blame democrats solely but they certainly are culpable.

            I’m not saying deregulation was not also part of the problem. But deregulation of trading mortgage backed securities is a problem mostly because federal government involved itself in pushing for bad loans to low income people who were not a good credit risk.

            Ignoring this important fact not only is bad because it puts the blame only on one side of an issue where two caused it, it also puts us at risk of a repeat performance.

        2. You cannot possibly be arguing that Fox News is “entirely controlled by liberals.” The concept of “fair and balanced” on Fox News is to follow a rabid right-winger with a disaffected Democrat who hates Obama. The definition of a liberal news organization is one that dares to contradict the Republican platform.

          Quit blaming the media.

          1. So you find a single media outlet and suddenly the fact that the New York Times, CNN, MSNBC, ABC, CBS, NBC, more than 80% of Washington reporters, a large percentage of local papers, TIME magazine, Newsweek, are all left of center?

            I certainly do blame the news media. It is seriously bias. You can hunt down a conservative point of view but it’s far more rare.

            I’m not saying Fox News is perfect either. They are certainly not flawless, but the majority of the rest of the media is extremely non critical of liberal politicians.

            In a perfect world you should not have to find a conservative news outlet to find out critical information about liberal politicians.

            1. I certainly was not defending Fox News, they have some aspects I like, some that I don’t I’m not someone who really trusts any single source of media. I am not sure I trust any of them really, they are all biased with an agenda.

              I’m just very sad that almost all of them are biased towards the political left, and Democratic party in the US. That means that one single party gets a huge amount of favoritism, and gets to do a lot of terrible, and corrupt things without much scrutiny. I would not like the situation any more if the media was similarly unilaterally biased towards the right, since then the Republicans would be able to freely get away with all kinds of terrible things without scrutiny as the Democrats can now, and we would be no better off.

        3. Or, what may be the biggest recession of all time happened on Lawn Ornament’s watch.

          Lawn Ornament was such a moron that he inherited a surplus and created the biggest deficit in recent history, making the current situation far worse.

          With respect to the concept of responsbility, let’s note that banks made the loans. No one made them do it and no one made them flood the market with toxic derivatives.

          Admittedly, the media is completely controlled by liberals … pinkos like Rupert Murdoch for instance.

        4. OMG the myopic PoliTardiness of MDN political discussions.

          Everyone, just STFU about politics around here. This is NOT a political forum and most of us are NOT qualified to make informed statements about the ongoing catastrophe of stupidity going on within our fracked up POS US government. If the dopey statements made around here from either side of the moronic 1-dimensional political spectrum were posted in a professional political discussion forum, the posters would be laughed off the Internet.

          I don’t see ANYONE here getting ALL the facts straight. All I see are propaganda warz. And do you know what propaganda is worth?

          Absolutely nothing. 😛

      3. Let’s not forget that Bush junior inherited a $3 Trillion surplus.

        Not even close. The debt hasn’t fallen since the Eisenhower administration.

        -jcr

        1. True. That was A BS statement. But it WAS the closest that we have been to a balanced budget for decades. And we quickly diverged for a balanced budget starting in 2001. Some of it was not Bush’s fault. But a lot of it was self-induced. And it will have a lasting negative impact on this country.

          The elder George Bush was a gentleman and a learned statesman, his son was not fit to be President.

          1. The elder George Bush was a gentleman and a learned statesman

            I think you should do a bit of research into the crimes he was involved in during the Nixon and Reagan administrations. He is in no way a person to admire.

            -jcr

          2. I hate Clinton for a lot of reasons, but I give him props for at least attempting to balance the budget.

            Note this only happened when Republicans took over congress, and not before that.

            I’d love to see an example of Democrats controlling congress, where they do have a balanced budget. Is that even possible?

  7. If the congress ever wanted to get serious about ending the recession, they’d abolish the corporate income tax. Corporations don’t pay taxes, they only collect them.

    -jcr

  8. TERM LIMITS NOW! You are not going to get any change in tax law until you get fresh thinking and cooperation. Right now you have idiots on both sides with their 20, 30 and in some cases 40 year careers because they never espoused the philosophy of coming, serving a few terms and going home to make a living doing something entirely different. They have gone from serving their constituents to serving themselves, their party and maybe their country if they have time. Since the Politicians are too stupid to know when they have worn out their welcome and the voters are too stupid because they just vote ’em back in time and time again because of redistricting, being the establishment favorite, etc. If you shorten the career of the politician, then you leave them little time to do anything but serve the people. Also, the politicians say public service is noble and laudable… Fine. If term limits isn’t doable, do away with retirement package and cut pay by a third and let us see how many stay based on their noble and laudable sentiment BS!

    Finally people talk about Clinton surplus and going back to Clinton tax rates… Can we go back to Clinton government spending levels as well!

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