These 5 U.S. tech companies are sitting on $430 billion in cash

“Just five U.S.-based tech firms — Apple, Microsoft, Google, Cisco Systems and Oracle — had cash reserves of $430.3 billion at the end of 2014, the vast majority of which were held overseas, according to a new report from Moody’s Investors Service,” Charles Riley reports for CNNMoney. “Over the past five years, the tech sector at large accounted for 56% of the total increase in corporate cash. Apple, with at least $178 billion to its name, holds more greenbacks than many entire industries.”

“It’s a trend that is likely to accelerate,” Riley reports. “That’s because most of the money is held overseas. Instead of bringing it back to the U.S., many firms choose to keep cash earned abroad beyond the reach of Uncle Sam, and his 35% tax rate on repatriated cash.”

“For now, Moody’s said progress on the issue is unlikely,” Riley reports. “‘At this stage in the political cycle and given strong differences on both sides of the aisle in Washington, we do not expect tax reform that would prompt overseas cash repatriation,’ the analysts wrote.”

Read more in the full article here.

MacDailyNews Take: Obviously, U.S. corporate taxes are too high.

In November 2012, Tim Worstall wrote an interesting article for The Register. In case you missed it:

Google, Apple, eBay shouldn’t pay taxes – people should pay taxes.

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

[Thanks to MacDailyNews Reader “Edward W.” for the heads up.]

22 Comments

    1. You forgot the /S

      In my mind, it is unthinkable that corporations can ever be considered people as long as corporations and the management thereof remain immune to prosecution and to the duties that the individual citizen is required to meet. Corporations represent medieval feudalism without the fun of knights and jousting.

    2. So, simply offer them a one time opportunity. They can bring it all back in 50 or 100 billion dollar blocks for 5% tax IF they invest it in capitol improvements in the US. You could insist they be for manufacturing capability or indexed for job creation. As the money floods back into the USA, you could specify zones if needed,but the overall restrictions should be kept to a minimum and as little as possible. It must be a big win on both sides. As they invest, others will too. Watch the economy take off like a rocket. The tax revenue generated would be far more than what they are currently not getting from all that money they are holding outside the US by hostage confiscatory tax rates.

  1. I agree with Tim’s take on this, but if “people should pay taxes”, it should be based on their ability to pay. A low-income person has less available income for food, rent, healthcare, etc.; where a wealthy individual can easily pay for those plus much more without affecting their quality of life.

      1. Abolish all other taxes and institute a national sales tax at about 12%, with housing, food, medical, and labor exempt from the tax. People who spend 90% of their income on exempt items would pay about 1.2% of their income. People who spend 10% of their income on exempt items would pay about 11% of their income.

        This would abolish taxes on corporate earnings, and also the capital gains tax, but it would mean that corporate CEOs, all other employees, and shareholders would pay a reasonable amount of taxes on the money they derive from those corporations. Corporations could then return all overseas capital at a 0% tax rate. There would also be no tax on money saved, which would encourage investment, rather than consumerism.

        The only other requirement would be a tax of 12% on money transferred out of the US, instead of being spent in the US. That would encourage investment and sales within the US and discourage importation of goods (It would amount to a 12% tariff on imported goods).

  2. Apple, Goggle, Microsoft, Cisco, and all the others should pay the taxes. These corporations use a hack of a lot of government services. Patent Office, to protect their intellectual property, Security and Exchange, to provide a market place where they could raise capital, Banking System that provides regulations on banks, so the storage of money is relatively safe, Court system, where on any given day you will find them in suing one another, State Department, befriending, coercing, bullying, other countries to let in their products. Not to mention a hell of a sales staff, at the expense of those tax payers not holding money overseas, the Presidents, past and present, the Secretaries of State, past and present, the United States Congress past, FAA, their flying all over the place each and every other part of the US government. If americans, who live overseas and work overseas, have to pay taxes, yes, these companies must pay. If americans, that have swiss bank accounts, are held responsible for tax on the interest they make on their money in a swiss bank must pay, yeah, these companies must pay.

    If, “companies are people my friend”, with the rights of speech via money, they should pay just like the rest of us, at the same rates as the rest of us. You say that will make them move overseas, fine! Whatever money made here is taxed here. Feel free to go wherever they think the ruling government just won’t take all their money and or freeze their assets. What are they waiting for? In the US, they have it really good. Not to mention that blanket, thank God and the service men and women, provide for us to sleep comfortably in our beds at night.
    PAY THE TAXES!

    1. So, Bob, what taxes should they pay? The taxes that they don’t owe? Or just the taxes that they already have and already do?

      Your rhetoric suggests that they should pay in excess of the required amount! The end amount that they have is not the issue if they are already paying the required amounts.

      I cannot get over how dumb some people think. The companies ARE paying their taxes and yet still making a profit. Why are you against profits? OH, what is that you say? Once they get past a certain point, they can’t make anymore?

      They are NOT doing anything ILLEGAL! They are doing what the law requires. Why are you do dead set as to blame the companies they have the money overseas? And they didn’t ship their money overseas either.

      1. Then occasionalposter, you seem to be all knowing, why is apple borrowing money to pay dividends? Why are these companies complaining about repatriation of cash? If it is not something they want to do, why bombard Congress with dough to get a lower rate on that money? Why should that money have a lower rate?
        As I said before, companies should pay out 100% of the profits to shareholders. The company has shares and being that they are shareholders would receive dividend money. They can use the money, from their dividend, to reinvest in the company, buy other companies, buy back more shares so they can retain even more money via the dividend pay out.

        Then why, why, oh why do they want to bring that money here?They certainly could have an overseas bank make out portions of dividends that must be paid to shareholders. So, why is they want to bring that money here? Do you know?

        $2,000,000,000,000 dollars and counting. Hey Europe is going to take it. Well, they’re not blind. All of that money should be paid out to shareholders. That much money in so many hands would be a big boost to the world economies.

    2. @bob, Apple has booked $17,100,000,000 in taxes in the last year. About half has already been paid to the US Treasury, the rest awaits repatriation. I think everyone would agree that Apple’s multibillions paid into the US Treasury is enough to cover (ahem, cough, cough) government services. Given the total shoddy treatment from this Administration, one wonders why they even try.

  3. Dear MDN, someone has to pay for infrastructure, bridges, highways, dams, the grid, but MDN says that the corporation should pay less taxes but does not mention any offsets needed to pay for them. The only offset is to raise more taxes on the backs on families and workers which would make people even poorer, more people living on the river bottoms. I do not favor making normal people poorer so they are less able to buy Apple products.

    1. Well, there is another way to offset the taxes on middle class Americans:

      Let’s not subsidize foreign despots and their militaries (i.e Egypt, Iraq, Afghanistan, Pakistan, etc…)

      And if we want to get REALLY practical… how about we start looking at the thing that takes up trillions of dollars each year: Entitlement Programs.

      All the infrastructure in the world could be repaired for what we dole out in “entitlements”.

      1. And just exactly what are you calling “entitlements”? If you mean Social Security benefits, they certainly ARE entitlements. I worked my ass off for 50 years with the promise of Social Security benefits when I retired. I paid into that system every dime the government required of me. I had no option to take it and invest it elsewhere. You bet I’m “entitled”! The government OWES me those benefits.

  4. …cash reserves of $430.3 billion at the end of 2014, the vast majority of which were held overseas

    Wake up #MyStupidGovernment! Cut the foreign profits tax rate and bring the money HOME to be used/invested HERE in the USA. Major DUH.

    1. Seriously US Congress! Look at this:

      Here’s a breakdown of the $430 billion in cash:
      Apple (AAPL, Tech30): $178 billion – 89% overseas
      Microsoft (MSFT, Tech30): $90.2 billion – 91% overseas
      Google (GOOG): $64.4 billion – 60% overseas
      Cisco (CSCO, Tech30): $53 billion – 94% overseas
      Oracle (ORCL, Tech30): $44.7 billion – 90% overseas

      Yes, US Congress. This is YOUR fault.

      1. According to occasional poster, that is not the case at all.
        There is nothing standing in the way of that money coming to the US. There is no reason to bring it to the US. Those countries where that money is now should be taxed by those governments or not. There is no reason foreign can issue checks to shareholders. So really, what’s the big deal.
        Pay the money out to shareholders and this is not a problem any longer.

        1. Yes, as the article (and I) point out there IS a barrier to this money coming to the US. Yes, there obviously IS a reason Apple wants to bring it to the US, that being their entire bond selling endeavor. That is the ONLY point of Apple selling their bonds. No, Apple cannot use foreign funds to US stockholders. I think you need to talk to some of the experts around here, of which I most certainly am not. But I’ve learned from them as you should too.

    2. I’ve brought this up before. Our country has a problem of sending more money out of the country than bringing it back. That can only lead to poverty. Apple (and a few other tech companies) have figured out how to get some money from all the rest of the world yet our government makes it too difficult for them to bring it home. Don’t we want money reinvested in America?

      1. Oh yes! This rush of cash out of the USA, if only through our awful debt and negative trade balance, has been going on for DECADES. The US Congress is outright crazy keeping up a barrier to bringing foreign made profits INTO the USA, rather than letting it be invested outside of the USA, which is exactly what happens. This is #MyStupidGovernment being outright self-destructive, a DAILY theme. It’s like the concentration of lead in the water in Washington, DC is astronomical. It makes NO sense. These are crazy people, both parties, been that way for decades. Way to wreck my beloved country. 😛

        1. Perhaps creating a bill allowing corporations to repatriate monies equal to the amount they pay out in dividends to shareholders at 0% might work. This would allow corporations to reward their shareholders with corporate funds w/o having to take out bonds. Add the stipulation that dividends for shares owned by the corporation paying out the dividend and its parent/child companies not applied to stock repurchase are excluded to eliminate any loophole of a corporation expatriating funds for its own use at 0%.

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