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Non-Tech : Kirk's Market Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (853)	3/13/2014 1:16:33 PM
From: Kirk ©	Respond to of 26588

Four tech giants hold a combined $124B in U.S. Treasurys and a further $39B in other government debt, the U.K.'s Bureau of Investigative Journalism calculates. Apple (AAPL) Microsoft (MSFT), Google (GOOG) and Cisco (CSCO) appear to hold much U.S. debt offshore, which enables them to earn tax-free interest. Repatriating the assets would saddle them with a huge tax bill. Companies’ response We asked the digital companies if they could justify a situation in which US taxpayers hand over interest payments to companies that are avoiding the immediate payment of US tax by keeping cash offshore rather than repatriating it. Only Cisco Systems, which holds $40.4bn of cash in foreign subsidiaries and has $27.8bn in Treasury bonds, directly addressed the issue on the record. The company said: ‘Cisco pays all taxes that are due. The cash held in Cisco’s non-US subsidiaries is generated from Cisco’s international operations. Cisco has approximately 50% of its employees outside the US and Cisco’s sales are approximately 50% from non-US customers. ‘US government obligations have long been one of the most stable investments in the world. The US Congress long ago enacted laws to promote investment in the US by individuals and businesses overseas, including non-US subsidiaries. Any interest income that Cisco receives on its U.S. government obligations is US taxable income to Cisco.’ Apple declined to comment other than to issue a series of bullet points that said: ‘We pay all the taxes we owe – every single dollar. We not only comply with the laws, but we comply with the spirit of the laws. We don’t depend on tax gimmicks. Apple carefully manages its foreign cash holdings to support its overseas operations in the best interests of its shareholders. Apple pays an extraordinary amount in US taxes.’ The company added that it believes it is the largest corporate income tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury in the 2012 financial year. Privately, some of the digital giants state what stops them repatriating their growing cash hordes are what they consider to be a punitive 35% US corporate tax rate. Only if the US government reduces the rate will they return the cash onshore, they argue. The United States’ federal corporate tax rate is the highest among the OECD’s 34 member countries. Though a report two years ago from the Congressional Budget Office found that the total amount of corporate federal taxes paid by US firms fell to 12.1% of profits – the lowest level since 1972. And in a number of European countries where corporate tax rates are far lower, there is growing clamour from politicians and campaigners for multinationals such as Apple and Google to stop shifting profits to jurisdictions such as Luxembourg. The perfectly legal strategy has the effect of substantially reducing taxes on profits made in lucrative consumer markets.

To: Kirk © who wrote (853)	3/13/2014 2:02:29 PM
From: Jerome	Read Replies (2) \| Respond to of 26588

Overseas money.......almost every company I have read about from Apple to Xilinx has got some cash stashed overseas. Ten years back it was called smart money management. Cisco carried this to the extreme.(biggest stash)... Now suppose that all this money was brought back to the US tax free. What would happen to it? I'll give you some ideas. Executive compensation would increase dramatically. (gotta put that cash to work, bigger boat, exotic cars etc) Stock dividends would be increased Share buy backs would increase As I see it companies have plenty of cash on hand if they want to hire more people or build more manufacturing plants in the US. American (especially tech companies) have tons of cash in the US to do whatever they want as far as expansion. The other day I read an article about HPQ......they assigned all their patents to a drop box subsidiary in Bermuda. So now when a license is granted on these patents, the cash flows to Bermuda instead of the US. Should we cry for HPQ and their Bermuda cash. I think not. Somehow it has to be recognized that what was once considered a brilliant idea ten years ago.....now looks less than brilliant.