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Apple Is the New Pimco

bloomberg.com

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Re: Apple Is the New Pimco

#51

Post by melling »

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…

You could change the world with $500 billion if you spent it effectively. Unfortunately, Google is the only company doing moonshot projects. I hope Apple adds a few more products to their lineup.

Re: Apple Is the New Pimco

#52

Post by devmach »

jfuhrman wrote: post #42
devmach wrote: post #40

Earlier quoted context omitted.

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, Eu…

>So the question is, if a country (like Spain or Greece) >If, say, European Union provides better shield, would Apple move its HQ to Germany or Spain? Two words. Labor laws. http://www.businessinsider.com/ceo-employee-lawsuits-killed-... https://news.ycombinator.com/item?id=9663421

Good point. But I would like to know other side of the story too, not just from the CEO.

Although, while I'm not an expert on France's labor laws, I agree laws in most EU countries are on the side of employees. But that doesn't mean when you hired someone, he/she will be working at the company for rest of his/her life without doing some work. Maybe someone who's expert on labor laws can clarify.

Edit: Also different countries in the EU has different laws. It might be difficult to `get rid of bad employee` but it might be easier in Spain...

Re: Apple Is the New Pimco

#53

Post by tanderson92 »

mahyarm wrote: post #35
ryandrake wrote: post #30

Earlier quoted context omitted.

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.

That hardly is an excuse for US corporations to avoid tax obligations. Rather it shows the two standards of treatment of the US towards real people and corporation "people".

Re: Apple Is the New Pimco

#54

Post by jusben1369 »

charlesdm wrote: post #38
jusben1369 wrote: post #25

Earlier quoted context omitted.

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 comp…

You're sort of falling victim to the rules of the current game (US entity owning subsidiary in xyz location) I was working at a higher level and rejecting the notion that a company no longer needs to pay taxes on profits simply because they're outside their borders. The Chinese government can tax worker salaries and levy a consumption tax on goods and services sold into the production. The German government can levy a GST too. And Apple, where applicable, can deduct those taxes before calculating profits. So conceptually that's the cleanest way it should work (same for a German or Australian company. No U S A U S A thing going on here)

Re: Apple Is the New Pimco

#55

Post by adam419 »

tdees40 wrote: post #32
adam419 wrote: post #26

Earlier quoted context omitted.

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.

By Apple et al I meant private enterprise.

Re: Apple Is the New Pimco

#56

Post by IkmoIkmo »

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"!)

They pay taxes over there alright (e.g. VAT), which is fine, nobody complains. The issue is they don't pay corporate tax on it in the US, despite the fact Apple is US based and does virtually all of its work in the US, and then commissions factories it doesn't own in China to produce its parts. The end result is that it pays much fewer taxes than citizens do, or companies that don't have a dedicated fiscal team (mostly SMEs which comprise the bulk of American firms, e.g. 90% of firms have less than 20 employees, and 99.9% have less than 500).

Now it's one thing to say it's justified because Apple would have to go out of business and lay off thousands of of their 100k employees. But we can all take a look at that financial situation and make our own moral judgement on whether they should have effective tax rates much lower than a regular business.

Re: Apple Is the New Pimco

#57

Post by cmsmith »

Kalium wrote: post #34
cmsmith wrote: post #27

Earlier quoted context omitted.

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.

Hence my parenthetical. But since you mentioned amendments, you should look into the Corwin Amendment [1], which was written to preclude its own repeal. The amendment was an all-in attempt to appease the slave states and prevent the Civil War, but was too little and too late. The purpose may be distasteful to the modern reader, and may not have held up in court ('Can Jesus microwave a burrito so hot that he cannot eat it?'), but it's there.

[1] http://en.wikipedia.org/wiki/Corwin_Amendment

Re: Apple Is the New Pimco

#58

Post by oldmanjay »

tdees40 wrote: post #32
adam419 wrote: post #26

Earlier quoted context omitted.

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.

I suppose the government could confiscate a hundred billion and use it to invade a small country for a few weeks.

I'm not going to put down your imagination but it didn't take me long to think of a worse use.

Re: Apple Is the New Pimco

#59

Post by dragontamer »

czinck wrote: post #43
return0 wrote: post #36

Earlier quoted context omitted.

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

Yeah, different term for the same thing. The technical term is government bond (as opposed to corporate), but most people call the US bonds Treasury notes or T-notes for short.

Actually, Treasuries have a vocabulary for them.

* "Bills" are any Treasury that is shorter than 1 year.

* "Notes" are 2-years, 3-years, 5-years, and 10-years.

* "Bonds" are any Treasury that is longer than 10 years.

They are all "bonds". But the vocabulary is a bit more precise than "short-term" vs "long term".

Re: Apple Is the New Pimco

#60

Post by justincormack »

jalonso510 wrote: post #12

On the other side of things, Apple has issued about $39 billion of its own bonds over the last couple years. A lot of it is longer term (30 years), but for the comparable bonds with 1-3 year maturities, they're only paying about 1.0% or a little under. It's not a huge difference vs the 1.06% + 0.2% quoted in the article, but they are making some money just by the fact that they have great credit and can borrow at a s…

They are paying 3.85% on their 30 year debt and 2.4% on the ten year, so it is costing them on the longer maturities.
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