Apple now holding more cash than USA • Hacker News Board

Re: Apple now holding more cash than USA

#51

Post by dpark » Fri, Jul 29, 2011, 6:48 PM UTC

hugh3 wrote: post #39

dpark wrote: post #31

Earlier quoted context omitted.

You're ignoring the part where we were discussing a tax holiday. When executives hoard money overseas for a decade and then bring it back tax-free, they are basically depriving the government of the tax revenue that money transfer should have brought in. Beyond that, there's not a lot of evidence for the notion that execs making more money is a net gain for the economy. It seems intuitive that more money in the hands…

depriving the government of the tax revenue that money transfer should have brought in. I'm not sure about the "should have" part here. That money was earned in another country. It has already had tax paid on it, in another country. It's silly for the US to try to double-tax companies, it just puts US-based companies at a competitive disadvantage against local companies when competing for foreign business. For instan…

I don't think you really understand how the offshored profits work. It's not just that money isn't brought back from overseas, but that money made in the US can be sent overseas. You create a wholly-owned overseas company that gets paid to do some kind of work for you. Then you way overpay them for that work. As a wholly-owned subsidiary, all the extra money they hold is actually owned by you, but you don't pay taxes on any money you send them because you call it an operating expense. So you effectively send a bunch of money overseas untaxed. Your German division does the same thing, and now all your money is sitting in the Cayman Islands waiting for a tax holiday so you can bring it home.

Your German company scenario is incorrect as well. Firstly, because they don't have to make any significant profit in Germany. US Sprocket GmbH could buy the sprockets from US Sprocket Inc at nearly the same price they sell them for, transferring the money to the US corp while paying almost no taxes in Germany (high revenue with equally high costs means no profit). Secondly, Deutsche Sprocket GmbH is dealing with the same "double taxation" in the US, so it's not an economic disadvantage.

Re: Apple now holding more cash than USA

#52

Post by dpark » Fri, Jul 29, 2011, 6:52 PM UTC

nitrogen wrote: post #40

dpark wrote: post #31

Earlier quoted context omitted.

You're ignoring the part where we were discussing a tax holiday. When executives hoard money overseas for a decade and then bring it back tax-free, they are basically depriving the government of the tax revenue that money transfer should have brought in. Beyond that, there's not a lot of evidence for the notion that execs making more money is a net gain for the economy. It seems intuitive that more money in the hands…

If you distribute a million dollars across the entire US economy, that's roughly 30 cents per person, and it's likely to be spent on some chewing gum or a very small amount of food. It dissipates before it has a chance to grow. If concentrated, the million dollars can be applied to things that are only possible when money is concentrated, like doing research and development, investing in large construction projects,…

Money doesn't "dissipate" because it's spent. Money changing hands is what fuels the economy.

There's also no reason to assume that tax money goes from wealthy pockets to poor ones directly. The government can build infrastructure (which they do a lot more of than private industry), fund R&D, etc. Individuals could also invest their money into funds that fuel R&D, fund startups, etc. It's incorrect to claim that only the wealthy invest.

Re: Apple now holding more cash than USA

#53

Post by dpark » Fri, Jul 29, 2011, 6:57 PM UTC

jz wrote: post #34

dpark wrote: post #20

Earlier quoted context omitted.

> I'm not an economist, but I think that when money flows from A to B, the economy does grow. Money moving from one place to another does not always help the economy. When money flows from the corporate coffers directly into the private accounts of its executives, generally little of that money actually flows into the greater economy. When you consider that under normal circumstances 30% of that money would flow into…

> Money moving from one place to another does not always help the economy. When money flows from the corporate coffers directly into the private accounts of its executives, generally little of that money actually flows into the greater economy. Can you give an example of how this would hurt the economy? EDIT - those that down voted, mind giving a reason?

First, "not help" is not a synonym for "hurt".

Second, if we assume that a dollar in one place does not always provide the same value to the economy as a dollar in another place (which everyone seems to agree on; they just don't agree on which places provide the most value), then we must conclude that over the long term sending as much money as possible to a sub-optimal place is worse for the economy than sending it somewhere more optimal.

Re: Apple now holding more cash than USA

#54

Post by nhaehnle » Fri, Jul 29, 2011, 6:57 PM UTC

A corporation holding cash means they're not investing as much as they could according to supply-side economic thinking.

This should make people reflect on the state of the economy. While it's true that some companies just like to hoard cash (e.g. Microsoft), this may just be the symptom of a bigger problem. With consumers low on cash due to the recession, it simply makes no sense to invest any more. This in turn guarantees that consumers will stay low on cash because a lot of slack remains in the job market.

Re: Apple now holding more cash than USA

#55

Post by funthree » Fri, Jul 29, 2011, 7:03 PM UTC

nhaehnle wrote: post #54

A corporation holding cash means they're not investing as much as they could according to supply-side economic thinking. This should make people reflect on the state of the economy. While it's true that some companies just like to hoard cash (e.g. Microsoft), this may just be the symptom of a bigger problem. With consumers low on cash due to the recession, it simply makes no sense to invest any more. This in turn gua…

Apple forbid they'd bring those manufacturing jobs to the US and actually pay some Californians a decent wage and help their own country.

http://harryjerry.com/tech/how-apple-products-are-made-in-fo...

http://www.google.com/publicdata/explore?ds=usunemployment&#...

Re: Apple now holding more cash than USA

#56

Post by dpark » Fri, Jul 29, 2011, 7:03 PM UTC

bad_user wrote: post #50

dpark wrote: post #20

Earlier quoted context omitted.

> I'm not an economist, but I think that when money flows from A to B, the economy does grow. Money moving from one place to another does not always help the economy. When money flows from the corporate coffers directly into the private accounts of its executives, generally little of that money actually flows into the greater economy. When you consider that under normal circumstances 30% of that money would flow into…

You're wrong. As long as those money are flowing, it helps the economy. The only instance where it wouldn't is if it disappeared from the market. This is even more obvious in Europe where a large chunk of all taxes payed comes from VAT; which are like sales taxes in the U.S. except everybody pays them.

> As long as those money are flowing, it helps the economy. The only instance where it wouldn't is if it disappeared from the market.

This is naive. In what sense does it help the economy if I take $1000 from my account and give it to my friend who puts it into his account? There's no extra money in circulation, no projects funded, no growth, nothing. Money moved and it did nothing.

> This is even more obvious in Europe where a large chunk of all taxes payed comes from VAT; which are like sales taxes in the U.S. except everybody pays them.

I'm not clear how that proves that money flowing always helps the economy. What the VAT indicates is that the EU believes in taxing at all points along the chain of production.

Re: Apple now holding more cash than USA

#57

Post by funthree » Fri, Jul 29, 2011, 7:06 PM UTC

ctdonath wrote: post #6

apress wrote: post #3

Of course, there's actually a much deeper and more important connection. The huge cash hoards of Apple, Google, Microsoft and other big multinational corporations are a direct outgrowth of clever tax strategies they use to shift profits to low-tax countries and avoid US taxes. http://www.reuters.com/article/2011/07/27/us-microsoft-tax-i... Corporate tax payments as a percentage of total tax revenues are low and histo…

Note that those big multinational corporations can't move money made outside the country to back home in the USA without incurring an absurd ~30% tax on top of whatever other taxes they paid whoever already. Word is Apple has been pushing for an amnesty so they _can_ bring their money home; until then, that money earned outside the US stays outside the US.

Maybe it's time they paid their fucking taxes like the rest of us.

Re: Apple now holding more cash than USA

#58

Post by entangld » Fri, Jul 29, 2011, 7:08 PM UTC

JacobAldridge wrote: post #29

orijing wrote: post #24

Earlier quoted context omitted.

They want lower revenues for the government. I would hope that it's not the same philosophy for their businesses.

They also want a smaller scope for the government. So it's not like saying 'I want to run this business but bring in less money', it's more like saying 'I want to run a smaller business, so what departments can we do without'. Smaller business may actually make more profit (read: be more efficient) than the larger one. I try not to claim a political preference left or right[1], but to prevent confusion I do feel they…

Does part of corporate "efficiency" include billions of dollars in bonuses?

That doesn't seem very efficient to me. The effect of large bonuses on the cost of administration seems a bit high.

Re: Apple now holding more cash than USA

#59

Post by jasongullickson » Fri, Jul 29, 2011, 7:11 PM UTC

So...when's the buy-out?

Re: Apple now holding more cash than USA

#60

Post by ck2 » Fri, Jul 29, 2011, 7:16 PM UTC

Steve Jobs only pays 15% taxes which is probably part of it.

(seriously, this is a fact http://seekingalpha.com/article/183086-steve-jobs-thrives-on... )

Take money from USA consumers, pour it into China manufacturing. They certainly aren't the only ones doing it but add them all up and you'll start to understand the problem.