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Apple Is the New Pimco

bloomberg.com

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Re: Apple Is the New Pimco

#31

Post by anigbrowl »

twoodfin wrote: post #11
oceanstone wrote: post #10

> Apple, Oracle, Google Inc. and seven of their biggest peers now have in excess of $500 billion of cash and marketable securities, up more than three-fold since 2008, according to data compiled by Bloomberg. The problem is much of it is stuck overseas. Stuck overseas in the sense that these corporations aren't willing to pay American taxes [1], insisting on using complex tax loopholes that essentially leave the bill…

Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)

Besides the fact that they're a US company, enjoying access to the world's deepest capital markets and most sophisticated and responsive legal system (the US legal system works incredibly well from a corporate perspective), you're implying that they're paying the same rate of tax as their domestic competitors in Germany and China/ I'm not sure this is the case, and in any case such local taxes would be deductible from US obligations under tax treaties, as far as I am aware (not a tax lawyer or accountant, consult a professional before setting up a megacorporation of your own).

Re: Apple Is the New Pimco

#32

Post by tdees40 »

adam419 wrote: post #26
sbov wrote: post #19

Earlier quoted context omitted.

Why should Apple be able to pay Irish taxes on a product designed in California, manufactured in China, and sold in Germany. It makes even less sense.

Because Apple et al can put the extra capital to better use than the united states government.

Apple appears to be terrible at deploying capital. Most of it is just sitting around in cash. It's actually hard to imagine a worse allocator of capital.

Re: Apple Is the New Pimco

#33

Post by [deleted] »

oceanstone wrote: post #10

> Apple, Oracle, Google Inc. and seven of their biggest peers now have in excess of $500 billion of cash and marketable securities, up more than three-fold since 2008, according to data compiled by Bloomberg. The problem is much of it is stuck overseas. Stuck overseas in the sense that these corporations aren't willing to pay American taxes [1], insisting on using complex tax loopholes that essentially leave the bill…

[deleted]

Re: Apple Is the New Pimco

#34

Post by Kalium »

cmsmith wrote: post #27
oceanstone wrote: post #10

> Apple, Oracle, Google Inc. and seven of their biggest peers now have in excess of $500 billion of cash and marketable securities, up more than three-fold since 2008, according to data compiled by Bloomberg. The problem is much of it is stuck overseas. Stuck overseas in the sense that these corporations aren't willing to pay American taxes [1], insisting on using complex tax loopholes that essentially leave the bill…

And the corporations only hold out for a repatriation holiday because there has been one in the past, and there is a decent chance of there being one in the near future. This is a slippery legislative cliff - once you indicate a willingness to have the holiday, there is no point in not just dropping the tax rate permanently since no one will bring their billions in otherwise. I wonder what would happen if we passed a…

> I wonder what would happen if we passed an un-repealable law (if such a thing existed) that prohibited tax holidays for the next thirty years?

It's really not possible. We can even repeal constitutional amendments.

Re: Apple Is the New Pimco

#35

Post by mahyarm »

ryandrake wrote: post #30
twoodfin wrote: post #11

Earlier quoted context omitted.

Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)

Why not? If I, as a US Citizen, moved to China or Germany to work there, I still owe US taxes on my income there.

The USA is _VERY_ unique in the world this way. Every other citizen of the world has the freedom to move away and stop paying taxes to their home country if they make no income from it.

Re: Apple Is the New Pimco

#36

Post by return0 »

czinck wrote: post #21
return0 wrote: post #15

Earlier quoted context omitted.

OK then where does braeburn keep its cash, in banks? Afaik, you practically lose money by keeping it in banks.

When people talk about a company having "cash" they don't mean a stack of $100 bills, it just refers to any low-risk and liquid asset. US Treasury notes are by far the most common. As to where they keep that paper, there's far less of it and it probably goes in a vault somewhere. I remember that being an issue post-Sandy that banks vaults where they kept a lot of bonds were flooded.

yeah, i didn't mean literally. treasury notes are kind of like bonds?

Re: Apple Is the New Pimco

#37

Post by mahyarm »

jusben1369 wrote: post #25
twoodfin wrote: post #11

Earlier quoted context omitted.

Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)

Errr because they're headquartered in the US and rely on the shield of the US government when it comes to rule of law, educating their workforce, providing the infrastructure etc for them to be in the position where they are today? In this day and age it makes _less_ sense to try and tax based on where componentry or network services or consumers start or finish.

But apple & co isn't just in the USA, and many of their best workers were educated & raised in other countries.

Re: Apple Is the New Pimco

#38

Post by charlesdm »

jusben1369 wrote: post #25
twoodfin wrote: post #11

Earlier quoted context omitted.

Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)

Errr because they're headquartered in the US and rely on the shield of the US government when it comes to rule of law, educating their workforce, providing the infrastructure etc for them to be in the position where they are today? In this day and age it makes _less_ sense to try and tax based on where componentry or network services or consumers start or finish.

Only an American could have written this answer. All other countries in the world use a non global taxation system.

Two basic scenarios:

1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65

2. UK entity owns a company in Sweden. Swedish company earns $100, pays 22% tax on that, and is left with $78. Declares a dividend to the UK parent, which is then left untaxed.

Why does 2 make more sense than 1? Because the money was generated in Sweden, and the fact that some parent/holding entity is UK based does not matter (like, at all).

Scenario 1 pushes US companies to expand abroad (i.e. through foreign M&A), and not repatriate any profits back to the US. It also makes it easier for non US entities to acquire US companies, because they can achieve larger tax synergies than a domestic US acquirer would.

A US company trying to achieve something like that would have to do an inversion, which sometimes can be hard to do.

The current state of the US tax code is a great example why Microsoft paid a whopping $2bn for something like Minecraft (Sweden based), or an even larger amount for Luxembourg based Skype. What can they do with that cash otherwise? It's not like they're going to repatriate (ever) without a tax holiday.

Re: Apple Is the New Pimco

#39

Post by anigbrowl »

larrys wrote: post #28
chollida1 wrote: post #2

> Getting allocations of corporate bond deals is one of the easiest ways for managers to outperform benchmark bond indexes because they’re typically sold at a discount to market rates, according to Jason Shoup, the head of U.S. high-grade credit strategy at Citigroup Inc. The bonds aren’t added to the indexes investors are measured against until the end of each month. That can generate as much as 0.2 percentage point…

"Steve Cohen at SAC was famous for overpaying on commissions " After a real estate deal last year I bought the broker a gift and delivered it. He said "wow shouldn't I be buying you the gift?". No problem because the next time I was the person he called first when he got a fresh listing on a commercial investment property which I was able to buy at a much lower price per sf than if he had actually taken the effort to…

Not to be critical of your business practice, but the broker's behavior seems to be on thin ethical ice here, since he had a fiduciary obligation to the client - his intentions may have been ethical but but he comes off as a little lazy/irresponsible for not getting the best price for his client.

As you're obviously investing in real estate yourself, how do you balance the benefits of liquidity from a quick sale vs. those of maximizing the sale price by shopping around? Put another way, if you were the seller in that transaction, is the opportunity cost of waiting a bigger worry than getting the best price? Is it just the seller's responsibility to instruct the broker 'this is my liquidity goal, anything on the top is gravy' or 'take your time selling, I want to get the full value of this asset', depending on the seller's need?

I'm not a business person/investor so I would like to understand your thought process better. Thank you. PS feel free to email.

Re: Apple Is the New Pimco

#40

Post by devmach »

jusben1369 wrote: post #25
twoodfin wrote: post #11

Earlier quoted context omitted.

Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)

Errr because they're headquartered in the US and rely on the shield of the US government when it comes to rule of law, educating their workforce, providing the infrastructure etc for them to be in the position where they are today? In this day and age it makes _less_ sense to try and tax based on where componentry or network services or consumers start or finish.

This made me think:

* Apple, Google, Microsoft et al. have many foreign workers (green card, H-2B, or maybe L1 visa) and it is easier for american citizens to move/work outside of US than foreigners to get work visa in US. So the question is, if a country (like Spain or Greece) promises tax advantage for next 25 years and makes easier to get visa for employees, would these companies move their hq there?

* If, say, European Union provides better shield, would Apple move its HQ to Germany or Spain?

* Infrastructure: I can say most European counties have better infrastructure than US and it looks like most us companies build their own if needed. With $500 billion on hand, what would prevent these companies to build a better infrastructure in a host country.

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