“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.
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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.]