
Apple now holding more cash than USA - JacobAldridge
http://www.bbc.co.uk/news/technology-14340470
======
apress
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...](http://www.reuters.com/article/2011/07/27/us-microsoft-tax-
idUSTRE76Q6OB20110727)

Corporate tax payments as a percentage of total tax revenues are low and
historically low compared to the size of the economy.
[http://www.csmonitor.com/Business/Tax-
VOX/2011/0209/Corporat...](http://www.csmonitor.com/Business/Tax-
VOX/2011/0209/Corporate-tax-only-a-piece-of-tax-revenue-pie)

[http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...](http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=263)

~~~
ctdonath
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.

~~~
ZachPruckowski
Last time we had an amnesty, all the money that flooded back in to the USA
wasn't reinvested the companies or used to grow the economy, it just want
straight into bonuses and dividends.

~~~
gwright
I'm not sure I follow. Distributing profits to employees (bonuses) or to
investors (dividends) is bad? The employees and investors now have more money
to buy things or to re-invest.

I'm not an economist, but I think that when money flows from A to B, the
economy does grow. It doesn't matter if that flow is to employees as bonuses,
investors as dividends, or to vendors as business expesnses.

~~~
dpark
> 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 the federal government to fund programs, it's pretty clear
that less money flows into the economy in cases of tax amnesty.

~~~
econgeeker
"private accounts of executives" is an interesting phrase when you cold have
said "checking accounts of employees". It conjures up the image of Scrooge
McDuck sitting on a pile of gold.

But that money is in the economy. If these "Executives" put it into stocks,
then it funds company growth. If they put it into municipal bonds then it
funds cities. If they put it into a checking account, then it funds home
loans. IF they were to turn it into cash and put it under their mattress--
then it still funds government spending (via inflation.)

The only possible way I can think of to take that money out of the economy--
and granted this is even if your assertion that "all the money" goes to these
fat cat "executives" were true, and I'm not buying it--- the only way they can
take the money out of the economy would be to buy actual physical gold bullion
coins and put it in a basement.

So, if these guys really were like Scrooge McDuck and literally had a basement
full of gold coins then it would be out of the economy. But that is pretty
much nobody.

~~~
dpark
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 of the wealthy would result in more investments and growth, but
to the best of my knowledge there's not much evidence for that.

The real question is not whether handing the wealthy extra money is bad, but
whether it's as good as doing something else. Sure, giving a wealthy man
another million might get him investing more. Giving that million to the
economy at large might do more, though. After all, those same investments you
say the wealthy will make could be made by average joes.

~~~
nitrogen
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, etc. Instead of spending the money
directly on basic resource acquisition, when concentrated, it can amplify
resource production, which lowers prices and provides a greater benefit to the
average Joe than having another 30 cents in his wallet.

~~~
dpark
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.

~~~
nkassis
"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."

And there are some project that only the government can take on due to how
long cost recoup would be or the risk levels (Space, Internet...) but those
things fund high paying jobs.

------
Alex3917
To be fair, just about everyone reading this will probably have more cash than
the USA in another week or two.

~~~
binbasti
At this burn rate, it's more like 3 days...

[http://www.zerohedge.com/news/treasury-cash-
drops-15-billion...](http://www.zerohedge.com/news/treasury-cash-
drops-15-billion-overnight-516-billion-5-billion-sgp-bills-roll)

------
ck2
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...](http://seekingalpha.com/article/183086-steve-jobs-thrives-on-
dividend-income) )

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.

~~~
tomjen3
And how many millons does he pay more than you?

Stop whining about the wealthy. Steve earned his money, you have no right to
them.

~~~
tty
>Steve earned his money, you have no right to them.

Are you implying Steve earned all the money Apple has?

------
nhaehnle
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.

~~~
nkassis
Here's why I believe the economy in the shitters :
<http://en.wikipedia.org/wiki/Velocity_of_money>

Money needs to move and it's not right now.

~~~
nhaehnle
I agree. The question is: how do you fix it?

In the case of the big corporations, for example, I see no direct, freedom-
compatible way of getting them to spend that money. The only way I see that
might work (though here Apple might still be a special case) is to create an
environment where businesses see an increase in demand as an incentive for
increased investment.

Then the question becomes where that demand should come from, and the most
feasible short-term answer (the government) is almost universally
ideologically opposed (yes, even Democrats these days seem to shy away from
direct spending to stimulate the economy).

~~~
funthree
I could think of a number of ideas that would be severely unpopular.

One idea: Start taxing people based on their net worth. It'd be for the
greater good after all, right?

------
grannyg00se
"the country has an operating cash balance of $73.7bn"

How is this so? I thought the annual budget was in deficit. Quite
significantly, in fact.

And not to mention the country has a massive debt. Although I understand how
that may not affect the operating cash balance.

The headline definitely seems like it could be used as a sound bite for
corporate tax increase commentary.

~~~
hugh3
A compulsive gambler, already hundreds of thousands of dollars in debt, goes
to a loan shark to borrow another five hundred bucks. He now has an operating
cash balance of five hundred dollars, while still having a net worth of minus
six figures.

~~~
grannyg00se
Then I agree that the number is pretty much meaningless. The government can
easily increase their operating cash balance simply by incurring more debt.
It's the debt, and the deficit that seem most relevant to my untrained mind.

In fact, if you want to compare with a corporation, I'd compare the entity's
deficit as a percentage of its revenue.

~~~
hugh3
_The government can easily increase their operating cash balance simply by
incurring more debt._

Except, and this is the whole reason that we currently have big problems, the
Government currently _can't_ legally incur more debt, unless Congress passes
an increase to the debt ceiling. So cash-on-hand is currently a serious issue.

~~~
jodrellblank
And so trillion dollar changes to a major world economy of 310 million people
are made by last minute bickering.

It's boggling.

~~~
prodigal_erik
Yeah, it's a titanic game of chicken between the dominant parties. As _The
Economist_ put it, "biggest unforced error in history still on schedule".

[http://www.economist.com/blogs/freeexchange/2011/07/democrac...](http://www.economist.com/blogs/freeexchange/2011/07/democracy-
america)

------
entangld
How do giant stacks of uninvested cash in corporate coffers improve the
economy? I wish someone could explain this.

~~~
thematt
Those "corporate coffers" you refer to are real investments. Apple is not
going to settle for getting a 0% return on the cash it holds. It has to put
the money _somewhere_. It's going to invest it in _something_ , whether it be
stocks, bonds, or a bank account of some type...all of which benefit the
economy in a different way.

------
thaumaturgy
Supply-side economists, take note.

~~~
cdonnellytx
Unfortunately, they will take note of it as "run the government like a
business", which tends to be how supply-side economists would prefer the
government to be run anyway.

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

~~~
JacobAldridge
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're trying to make this 'business' much smaller than
it needs to be.

[1] My political preference is merely that politicans are like diapers. They
need to be changed regularly, and for the same reason.

~~~
entangld
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.

------
rexreed
What exactly will Apple do with this cash other than buy billion-dollar patent
portfolios? Are there potential big acquisition deals in the works that make
sense?

------
timedoctor
The government will get the money eventually through increased taxes or
through printing more money and deflating the value of the apple "cash" pile.
All the Government has to do is to print money and they can take Apple's money
without Apple being able to do anything about it!

~~~
dangrossman
Nothing says Apple must keep the money in the form of US dollars in a bank
account. If it's sitting in any kind of investment that tracks inflation,
printing money won't take the money. If they choose to keep it in other
currencies, printing money won't take the money.

------
lawlit
What will happen to the American if the congress does not vote on the rise ?

~~~
tomelders
No one can say for sure. It's a doomsday scenario that no one is really
prepared for.

The only thing anyone can say with any certainty is that the next president of
the USA will be a Republican, because that's what this is all about. Destroy
the economy, blame the incumbent, and scoop up the next election.

~~~
gnaritas
> The only thing anyone can say with any certainty is that the next president
> of the USA will be a Republican

And they'd be lying.

~~~
tomelders
I admit, I was being trite, but it's a good bet.

~~~
gnaritas
It's really not. I'd say odds are Obama gets a second term. Congress is broke,
but the president is doing just fine.

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

------
angelortega
It's time to nationalize Apple, sell its assets and use the money to take off
of the crisis.

~~~
Wentz
Sarcasm?

~~~
angelortega
Just kidding, but some people aren't just able to accept a joke about Apple.

All this does not make my initial comment less true, though.

------
rickdale
If you have $1 you are holding more cash than the US.

~~~
nivertech
If you have $1 and don't have a mortgage or other debts

~~~
rickdale
I said more cash, not more worth or value. Thanks for the downvotes, great to
see everyone is using their noggins these days.

------
ridruejo
Can't wait to see what iBama will look like :)

