Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Are Corporations Hoarding Trillions?

nytimes.com

Post reply on HN
Print view View original

71–80 of 412 posts

Re: Why Are Corporations Hoarding Trillions?

#71

Post by tracker1 »

Nrsolis wrote: post #26
r00fus wrote: post #6

Earlier quoted context omitted.

Seems like that's a proposal that's trivial to exploit, I can think of at least a couple of ways off the top of my head: shell companies funds-shuffling, related companies wash buying/selling, etc.

Adding in another market distortion isn't going to help matters, you only create opportunities for people to game the system in an ever increasing effort to explore the law of unintended consequences. Those funds are held (usually) as US Treasury securities, or are at least hedged against any local currency risk, much the same way that any sovereign maintains a certain amount of foreign currency reserve. The most dir…

I'm not suggesting taking money from "evil" corporations... only in that money made in a locality should be taxed in that locality... getting rid of corporate 'income' taxes in favor of tariffs/vat and money exports would allow for that, with less opportunity for subverting the system, so to speak... At the end of the year, a tax refund could be given if you're a person, and transferred less than 100k out of the country.

It could be a much simpler system, with less bureaucracy needed. There are other possibilities as well. Right now, many corporations are holding onto funds, which doesn't help any economy, and worse, shifting those funds to holding companies to avoid taxes... What I'm suggesting would punish holding onto assets and encourage activity domestically... foreign goods will always be needed, and as such taxes would apply. VAT systems happen in lots of countries.

Re: Why Are Corporations Hoarding Trillions?

#72

Post by jandrese »

phkahler wrote: post #25
mschuster91 wrote: post #12

> Remarkably, the United States government was able to tax all that productive corporate behavior so much that it came close to paying off all its debts for the first time in 160 years. The current US debt is over 18.900.000.000.000 $ ( http://www.usdebtclock.org/# ). Am I getting the author right that the US managed to put on 18 B $ in 20 years?!

>> The current US debt is over 18.900.000.000.000 Am I getting the author right that the US managed to put on 18 B $ in 20 years?! Google image search: https://www.google.com/search?q=US+debt&biw=1217&bih=755&sou... Check this one: http://wolfstreet.com/2014/12/02/us-national-debt-jumps-181-... So not quite, but at the end of Clinton there was a small surplus. Bush looked at that surplus and said the following: 1) Th…

#4 was really "tax breaks for the rich". The check everyone else got was just an early chunk of their normal refund check.

Surpluses are a big problem to the "starve the beast" strategy though. The whole point is to run the government out of money so it is forced to reduce or shut down programs that are otherwise quite popular. That's why we implemented huge handouts to billionaires and not one but two unfunded wars.

Re: Why Are Corporations Hoarding Trillions?

#73

Post by mschuster91 »

jandrese wrote: post #72
phkahler wrote: post #25

Earlier quoted context omitted.

>> The current US debt is over 18.900.000.000.000 Am I getting the author right that the US managed to put on 18 B $ in 20 years?! Google image search: https://www.google.com/search?q=US+debt&biw=1217&bih=755&sou... Check this one: http://wolfstreet.com/2014/12/02/us-national-debt-jumps-181-... So not quite, but at the end of Clinton there was a small surplus. Bush looked at that surplus and said the following: 1) Th…

#4 was really "tax breaks for the rich". The check everyone else got was just an early chunk of their normal refund check. Surpluses are a big problem to the "starve the beast" strategy though. The whole point is to run the government out of money so it is forced to reduce or shut down programs that are otherwise quite popular. That's why we implemented huge handouts to billionaires and not one but two unfunded wars.

> and not one but two unfunded wars.

Afghanistan was certainly a justified war, and Iraq was done under false pretenses and badly executed, but (if done right) it would have been worth the effort.

Fighting oppressive regimes is always worth the price. The only thing that must not happen (yet again) is to fuck up the "what happens after neutralization of regime forces" part.

Implementing a Marshall-like plan for Afghanistan and Iraq would certainly have led both countries to a richer life instead of the clusterfuck that both countries are now. Thousands of soldiers, millions of civilians unneccessary dead, all only because of political fuck ups.

Re: Why Are Corporations Hoarding Trillions?

#74

Post by Qwertious »

mikeash wrote: post #68
forgetsusername wrote: post #28

Earlier quoted context omitted.

Why is it that people always talk about only one side of the accounting ledger? The US has a net worth of nearly $150 trillion dollars. Who cares about the absolute value of debt?

The federal government doesn't own the entire country. What's the net worth of the federal government?

It's a function that takes into account how much it can tax the entire country, of course.

Re: Why Are Corporations Hoarding Trillions?

#75

Post by HillaryBriss »

542458 wrote: post #18
mschuster91 wrote: post #12

> Remarkably, the United States government was able to tax all that productive corporate behavior so much that it came close to paying off all its debts for the first time in 160 years. The current US debt is over 18.900.000.000.000 $ ( http://www.usdebtclock.org/# ). Am I getting the author right that the US managed to put on 18 B $ in 20 years?!

Yeah, I'm not sure what the author was trying to say there, because that's not even close to true. The US wasn't getting anywhere near to paying off the national debt in the 1990s. https://en.wikipedia.org/wiki/National_debt_of_the_United_St...

Yeah. I don't quite know what the article author meant when he said that either. Perusing these two US Treasury tables, I get a distinctly different impression:

https://www.treasurydirect.gov/govt/reports/pd/histdebt/hist...

https://www.treasurydirect.gov/govt/reports/pd/histdebt/hist...

I guess it depends on what the meaning of "close" is.

Re: Why Are Corporations Hoarding Trillions?

#76

Post by slg »

AndrewUnmuted wrote: post #67
lmm wrote: post #53

Earlier quoted context omitted.

Could they just be trying to put off paying their taxes until a Republican gets elected and lowers the rates?

I doubt even a Republican would be willing to lower corporate income taxes. Nominal rates haven't been touched for quite a while; politicians opted instead to just allow the loopholes and safe havens to continue lowering the effective rate, and corporations seemed to be happy about that. The likely reason for corporations holding onto cash is the lesser impact deferrals can make in today's markets. Companies are beco…

>I doubt even a Republican would be willing to lower corporate income taxes.

I think a lot of people expect some type of future repatriation period that would allow these companies to bring their cash stateside at a reduced tax rate during a short temporary window. It is something the government has done in the past and it probably makes sense to do again sometime soon. I wouldn't want to be the CEO who overpays taxes by billions just because I wasn't patient enough to wait for another one of these tax break windows.

Re: Why Are Corporations Hoarding Trillions?

#77

Post by perlpimp »

ryandrake wrote: post #19

Looks like the TL;DR of this article is: "Corporate leadership, being so much smarter than the rest of us dummies, sees something big on the horizon coming. They're saving all their cash so they can later invest because "the next transformative innovation could be just around the corner". Apparently they're smart enough to hoard all this cash, but not smart enough to know exactly what that transformative innovation i…

If to follow buffet's cues, it would be smart to save when valuations are huge so you can make acquisitions on the cheap side when correction moves through.

Re: Why Are Corporations Hoarding Trillions?

#78

Post by Analemma_ »

mschuster91 wrote: post #73
jandrese wrote: post #72

Earlier quoted context omitted.

#4 was really "tax breaks for the rich". The check everyone else got was just an early chunk of their normal refund check. Surpluses are a big problem to the "starve the beast" strategy though. The whole point is to run the government out of money so it is forced to reduce or shut down programs that are otherwise quite popular. That's why we implemented huge handouts to billionaires and not one but two unfunded wars.

> and not one but two unfunded wars. Afghanistan was certainly a justified war, and Iraq was done under false pretenses and badly executed, but (if done right) it would have been worth the effort. Fighting oppressive regimes is always worth the price. The only thing that must not happen (yet again) is to fuck up the "what happens after neutralization of regime forces" part. Implementing a Marshall-like plan for Afgha…

> but (if done right) it would have been worth the effort.

You could say that about literally any failed initiative in history.

Re: Why Are Corporations Hoarding Trillions?

#79

Post by chatmasta »

jandrese wrote: post #70
chatmasta wrote: post #69

I'm surprised nobody has mentioned the geopolitical advantages of hoarding cash. A big pile of untaxed, uninvested cash represents a significant political bargaining chip for the corporation in control of it. Apple can extract more from negotiations with the US government, for example, when it's holding $100b USD offshore. Quite simply, that money is leverage. Over the next several decades we will see the decline of…

Sigh, I was really hoping Cyberpunk stories from the 80s wouldn't turn out to be prophetic.

Unfortunately more of them come true every month...

On the bright side, at least cryptographers excel at predicting threat models.

Re: Why Are Corporations Hoarding Trillions?

#80

Post by AnthonyMouse »

bradleyjg wrote: post #50
fennecfoxen wrote: post #29

Earlier quoted context omitted.

As a corporation, the traditional thing to do with cash you don't need is to return it to your owners, either through dividends or through share repurchases: If the owners wanted to own money sitting in a bank account, they could put the money in a bank account themselves. If they wanted to own a company, they'd be better off owning just the business part without a chunk of low-return cash attached. Beyond basic liqu…

If you expect your shareholders to get much better overall tax treatment on the money sometime in the relatively near future, it makes a lot of sense to hold on to it. Especially with respect to money earned abroad, I'd think that's a decent guess. In particular, I'd expect there will be another one-time-only-we-really-mean-it-this-time repatriation holiday in 2017 or 18.

> In particular, I'd expect there will be another one-time-only-we-really-mean-it-this-time repatriation holiday in 2017 or 18.

Nobody even really takes advantage of those because it isn't about repatriation. It's about the interest.

If you have a pile of cash (really investment securities) held by MegaCorp in some low tax jurisdiction, it pays the low tax rate on the interest the money generates. If you repatriate the money and then invest it in the same things MegaCorp was, now the taxes you owe on the future interest are in the high tax jurisdiction. Nobody is interested in doing that even if you could repatriate the money tax-free.

The only reason to repatriate the money is if you want to spend it, which large investors don't do with most of their money (because they make far more than they spend), and which anybody can do at any time by selling shares, which has preferable tax treatment to dividends anyway but has the unfortunate side effect of leaving the entire pile of cash (and all subsequent interest) inside the original corporation forever.

The only way to get around this is to stop taxing investment income. Which is of course completely unfair to everyone else unless you also stop taxing earned income and tax consumption instead. The objection then being that taxing consumption instead of income is advantageous to rich investors who spend a smaller percentage of their income than other people, except that that is the status quo.

Post reply on HN