I'm betting the U.S. corporation, not one of Apple's foreign subsidiaries, is the one issuing the bonds and therefore the borrowed money will be available to the U.S. corporation to use as it pleases. I'm sure Apple headquarters and accountants are well on top of this. No worries.
Of course it is the US corporation. My post was about the possibility of using non-US cash to pay the coupon and principal -- i.e., probably not an option.
I’m sitting here wondering if Apple will ever pay the taxes on all that money they refuse to...
I’m sitting here wondering how someone could be so willfully stupid so many times, and then it hit me: you’re just trolling. Inexcusably, irrefutably trolling.
Apple doesn’t have to do anything with THEIR money. It’s THEIR money. The US is the only country that taxes twice.
Apple pays close to 2% in dividends. So any money the company can borrow at less than 2% to buy back shares saves the company more money on the dividends it no longer has to pay on those repurchased/retired shares than it costs the company to finance the loan. Quite sane, actually.
You cannot compare returns across two different currencies -- that's like comparing apples and oranges.
Whether 1.1% in Euros is 'higher' or 'lower' than 2% in USD depends on what you think will happen to exchange rates: for example, if the Euro is expected to appreciate relative to the dollar by, say, 1% per year relative to today's EUR/USD rate, then 2% in USD is cheaper on an exchange-rate expectation-adjusted basis than the 1.1% in Euros (2% < 1.1% + 1% = 2.1%).
And anyone who says (s)he can predict exchange rates is no more credible than someone trying to sell you beachfront property in Arizona.
It's not the only country. It's amongst a small handful today. (By "taxes twice" I am assuming you mean having a worldwide, as opposed to a territorial, taxation system).
While all of you are talking about how best to spend Apple's money, I'm sitting here wondering if Apple will ever pay the taxes on all that money they refuse to repatriate and bring back to the US economy. I know the sales were made in Europe, but the company lives in the USA. Show some loyalty to your country of origin and put that damn money into the system. That's the problem with corporate America: no loyalty to the nation itself, just to shareholder value.
It really is an own goal wanting your economy building companies to be taxed twice. They have already paid tax where they earned the money, and for some reason the dumb politicians that dreamed up this stupid policy of taxing again when the company brings the rest home could not foresee the inevitable consequences. This is the result, all that effort could have been used to grow American companies on shore but instead gets tied up in lawyer games so politicians, rather than encourage the private sector to use their OS earnings to build out domestically, can have a go at squandering more of Other Peoples' Money.
As to what Apple can do with the money, rather than an MNVO, how about establishing a global network? A mesh of very high altitude server platforms spanning the globe? Maybe solar powered? Think big, people's!
Can somebody here please explain to me why Apple's huge international cash reserves can't buy AAPL ?
Isn't this money invested in other stuff like bonds or other low interest rate securities ?
If it's already invested in something, why can't it be used to buy stocks, specifically AAPL ?
Is it some legal road block ?
The international cash reserves can most certainly be used to buy AAPL. However, that would be after paying taxes at the US rate of 35% (a payment that would be triggered if the international cash was brought back to the US, which would necessarily be the case with a share repurchase).
This is the reason that Apple has funded a substantial piece of its share repurchases with nearly $40B US$ debt issues in the US (on top of which, it has used a lot of its US-based cash).
It really is an own goal wanting your economy building companies to be taxed twice. They have already paid tax where they earned the money
ummm... No. Approx $60B IIRC has not been taxed anywhere. Could be off by a bit but I think that's a pretty close figure, low if anything. Also they'd get a credit for any taxes already paid to foreign governments wouldn't they, paying only the difference due? I don't think it would be taxed twice.
The international cash reserves can most certainly be used to buy AAPL. However, that would be after paying taxes at the US rate of 35% (a payment that would be triggered if the international cash was brought back to the US, which would necessarily be the case with a share repurchase).
I understand that if Apple Inc. were to buy the stock with repatriated money that it would be taxed first. I was suggesting it be purchased by a foreign entity with a foreign currency through some foreign brokerage firm. So if the stock is bought by a non US subsidiary incorporated in another country, that still counts as an Apple Inc. purchase ?
I ask this because I have some Apple stock purchased online through an investment service tied to my bank and bank accounts, using some of my Registered Retirement Savings Plan money in my local currency. Obviously the bank through its investment arm is ultimately buying the stock in US Dollars at some point, but I personally have no dealings with the IRS. Does that mean that the investment service deals with the IRS and it's transparent to me or are the rules different for personal investors ?
I’m sitting here wondering how someone could be so willfully stupid so many times, and then it hit me: you’re just trolling. Inexcusably, irrefutably trolling.
Apple doesn’t have to do anything with THEIR money. It’s THEIR money. The US is the only country that taxes twice.
TS, I'm pretty sure it's not actually taxed twice, at least not in the way I think you mean it.
Example: Say Apple earns profit of 1M US in Great Britain. In round figures they'd pay 210K to the Brits, a 21% corporate tax rate. If they ever repatriated the money here they would only owe the US another 9%. the difference between the 21% paid and the 35% base rate for the US. They would NOT be paying another 35% to IRS tax collectors on top of the 21% paid to Great Britain.
I understand that if Apple Inc. were to buy the stock with repatriated money that it would be taxed first. I was suggesting it be purchased by a foreign entity with a foreign currency through some foreign brokerage firm. So if the stock is bought by a non US subsidiary incorporated in another country, that still counts as an Apple Inc. purchase ?
1) What would be the motive of such a purchase? To avoid paying taxes to the IRS and yet do a US share repurchase? If so, the short answer is, it's not possible.
2) If something is bought by Apple's subsidiary abroad, it will not count as 'Apple Inc's' purchase if the purpose is to return money to shareholders via a dividend, repurchase, etc.
Bottom line is, there's no simple way around this. The only options are: (i) Buy non-US assets; (ii) Leave it there forever; (iii) Bring it back and pay the differential in tax; (iv) Negotiate a lower rate with the US government.
I’m sitting here wondering how someone could be so willfully stupid so many times, and then it hit me: you’re just trolling. Inexcusably, irrefutably trolling.
Apple doesn’t have to do anything with THEIR money. It’s THEIR money. The US is the only country that taxes twice.
TS, I'm pretty sure it's not actually taxed twice, at least not in the way I think you mean it.
Example: Say Apple earns profit of 1M US in Great Britain. In round figures they'd pay 210K to the Brits, a 21% corporate tax rate. If they ever repatriated the money here they would only owe the US another 9%. the difference between the 21% paid and the 35% base rate for the US. They would NOT be paying another 35% to IRS tax collectors on top of the 21% paid to Great Britain.
He simply means taxation of worldwide -- as opposed to territorial -- income. Given that the US tax rate is 35%, what he's saying is, it's first taxed (at say, 20%) abroad, and then it's taxed for a second time (an extra 15%) when it gets to the US. I.e., it's "taxed twice."
Obversely, if the tax rate abroad were higher then the company would get a tax credit. Unfortunately, no other major industrialized country falls into that category.
Countries such as Germany have a territorial system, where if a German company paid its taxes at whatever the rate was abroad, there would be no further taxation in Germany when the money is brought back (regardless of whether the tax rate abroad was higher or lower than that of Germany). I.e., they're "taxed once."
I’m sitting here wondering how someone could be so willfully stupid so many times, and then it hit me: you’re just trolling. Inexcusably, irrefutably trolling.
Apple doesn’t have to do anything with THEIR money. It’s THEIR money. The US is the only country that taxes twice.
TS, I'm pretty sure it's not actually taxed twice, at least not in the way I think you mean it.
Example: Say Apple earns profit of 1M US in Great Britain. In round figures they'd pay 210K to the Brits, a 21% corporate tax rate. If they ever repatriated the money here they would only owe the US another 9%. the difference between the 21% paid and the 35% base rate for the US. They would NOT be paying another 35% to IRS tax collectors on top of the 21% paid to Great Britain.
ummm... No. Approx $60B IIRC has not been taxed anywhere.
Sort of. It was "subject to tax" but in a place where the tax rate was zero. So there has not been a tax payment on it, but it has been "taxed" because it was subject to tax.
A subtle point but one much loved by corporate tax advisers.
He simply means taxation of worldwide -- as opposed to territorial -- income. Given that the US tax rate is 35%, what he's saying is, it's first taxed (at say, 20%) abroad, and then it's taxed for a second time (an extra 15%) when it gets to the US. I.e., it's "taxed twice."e."
Well I'm not certain that's what he meant which is why I replied. In addition more than a few folks are confused by this and assume when they see "taxed twice" it would be another 35% in taxes on top of the foreign taxes already paid, That actually would be double-taxation if it happened. Which it doesn't.
Comments
I'm betting the U.S. corporation, not one of Apple's foreign subsidiaries, is the one issuing the bonds and therefore the borrowed money will be available to the U.S. corporation to use as it pleases. I'm sure Apple headquarters and accountants are well on top of this. No worries.
Of course it is the US corporation. My post was about the possibility of using non-US cash to pay the coupon and principal -- i.e., probably not an option.
I have no worries at all.
Apple arguably had no reason to buy Beats....
You know this how?
I’m sitting here wondering how someone could be so willfully stupid so many times, and then it hit me: you’re just trolling. Inexcusably, irrefutably trolling.
Apple doesn’t have to do anything with THEIR money. It’s THEIR money. The US is the only country that taxes twice.
Apple pays close to 2% in dividends. So any money the company can borrow at less than 2% to buy back shares saves the company more money on the dividends it no longer has to pay on those repurchased/retired shares than it costs the company to finance the loan. Quite sane, actually.
You cannot compare returns across two different currencies -- that's like comparing apples and oranges.
Whether 1.1% in Euros is 'higher' or 'lower' than 2% in USD depends on what you think will happen to exchange rates: for example, if the Euro is expected to appreciate relative to the dollar by, say, 1% per year relative to today's EUR/USD rate, then 2% in USD is cheaper on an exchange-rate expectation-adjusted basis than the 1.1% in Euros (2% < 1.1% + 1% = 2.1%).
And anyone who says (s)he can predict exchange rates is no more credible than someone trying to sell you beachfront property in Arizona.
So, it's not quite sane, actually.
ok I will let you make profit at 0.5% on average with AAPL while I do it at 2-3% with BABA
Knock yourself out. And come back 3-5 years from now and tell us how it worked out for you. Until then, it's pointless speculation.
It's not the only country. It's amongst a small handful today. (By "taxes twice" I am assuming you mean having a worldwide, as opposed to a territorial, taxation system).
ok I will let you make profit at 0.5% on average with AAPL while I do it at 2-3% with BABA
That statement makes as much sense as Han Solo's bragging about doing the Kessell Run in 12 parsecs. Personally my AAPL investment is up about 150%.
That statement makes as much sense as Han Solo's bragging about doing the Kessell Run in 12 parsecs. Personally my AAPL investment is up about 150%.
And I have a few purchased at $24. And that was pre-split, so about $3.50 for today's shares.
Alas, far too few of them.
Can somebody here please explain to me why Apple's huge international cash reserves can't buy AAPL ?
Isn't this money invested in other stuff like bonds or other low interest rate securities ?
If it's already invested in something, why can't it be used to buy stocks, specifically AAPL ?
Is it some legal road block ?
As to what Apple can do with the money, rather than an MNVO, how about establishing a global network? A mesh of very high altitude server platforms spanning the globe? Maybe solar powered? Think big, people's!
Can somebody here please explain to me why Apple's huge international cash reserves can't buy AAPL ?
Isn't this money invested in other stuff like bonds or other low interest rate securities ?
If it's already invested in something, why can't it be used to buy stocks, specifically AAPL ?
Is it some legal road block ?
The international cash reserves can most certainly be used to buy AAPL. However, that would be after paying taxes at the US rate of 35% (a payment that would be triggered if the international cash was brought back to the US, which would necessarily be the case with a share repurchase).
This is the reason that Apple has funded a substantial piece of its share repurchases with nearly $40B US$ debt issues in the US (on top of which, it has used a lot of its US-based cash).
ummm... No. Approx $60B IIRC has not been taxed anywhere. Could be off by a bit but I think that's a pretty close figure, low if anything. Also they'd get a credit for any taxes already paid to foreign governments wouldn't they, paying only the difference due? I don't think it would be taxed twice.
The international cash reserves can most certainly be used to buy AAPL. However, that would be after paying taxes at the US rate of 35% (a payment that would be triggered if the international cash was brought back to the US, which would necessarily be the case with a share repurchase).
I understand that if Apple Inc. were to buy the stock with repatriated money that it would be taxed first. I was suggesting it be purchased by a foreign entity with a foreign currency through some foreign brokerage firm. So if the stock is bought by a non US subsidiary incorporated in another country, that still counts as an Apple Inc. purchase ?
I ask this because I have some Apple stock purchased online through an investment service tied to my bank and bank accounts, using some of my Registered Retirement Savings Plan money in my local currency. Obviously the bank through its investment arm is ultimately buying the stock in US Dollars at some point, but I personally have no dealings with the IRS. Does that mean that the investment service deals with the IRS and it's transparent to me or are the rules different for personal investors ?
TS, I'm pretty sure it's not actually taxed twice, at least not in the way I think you mean it.
Example: Say Apple earns profit of 1M US in Great Britain. In round figures they'd pay 210K to the Brits, a 21% corporate tax rate. If they ever repatriated the money here they would only owe the US another 9%. the difference between the 21% paid and the 35% base rate for the US. They would NOT be paying another 35% to IRS tax collectors on top of the 21% paid to Great Britain.
I understand that if Apple Inc. were to buy the stock with repatriated money that it would be taxed first. I was suggesting it be purchased by a foreign entity with a foreign currency through some foreign brokerage firm. So if the stock is bought by a non US subsidiary incorporated in another country, that still counts as an Apple Inc. purchase ?
1) What would be the motive of such a purchase? To avoid paying taxes to the IRS and yet do a US share repurchase? If so, the short answer is, it's not possible.
2) If something is bought by Apple's subsidiary abroad, it will not count as 'Apple Inc's' purchase if the purpose is to return money to shareholders via a dividend, repurchase, etc.
Bottom line is, there's no simple way around this. The only options are: (i) Buy non-US assets; (ii) Leave it there forever; (iii) Bring it back and pay the differential in tax; (iv) Negotiate a lower rate with the US government.
I’m sitting here wondering how someone could be so willfully stupid so many times, and then it hit me: you’re just trolling. Inexcusably, irrefutably trolling.
Apple doesn’t have to do anything with THEIR money. It’s THEIR money. The US is the only country that taxes twice.
TS, I'm pretty sure it's not actually taxed twice, at least not in the way I think you mean it.
Example: Say Apple earns profit of 1M US in Great Britain. In round figures they'd pay 210K to the Brits, a 21% corporate tax rate. If they ever repatriated the money here they would only owe the US another 9%. the difference between the 21% paid and the 35% base rate for the US. They would NOT be paying another 35% to IRS tax collectors on top of the 21% paid to Great Britain.
He simply means taxation of worldwide -- as opposed to territorial -- income. Given that the US tax rate is 35%, what he's saying is, it's first taxed (at say, 20%) abroad, and then it's taxed for a second time (an extra 15%) when it gets to the US. I.e., it's "taxed twice."
Obversely, if the tax rate abroad were higher then the company would get a tax credit. Unfortunately, no other major industrialized country falls into that category.
Countries such as Germany have a territorial system, where if a German company paid its taxes at whatever the rate was abroad, there would be no further taxation in Germany when the money is brought back (regardless of whether the tax rate abroad was higher or lower than that of Germany). I.e., they're "taxed once."
ummm... No. Approx $60B IIRC has not been taxed anywhere.
Sort of. It was "subject to tax" but in a place where the tax rate was zero. So there has not been a tax payment on it, but it has been "taxed" because it was subject to tax.
A subtle point but one much loved by corporate tax advisers.
Well I'm not certain that's what he meant which is why I replied. In addition more than a few folks are confused by this and assume when they see "taxed twice" it would be another 35% in taxes on top of the foreign taxes already paid, That actually would be double-taxation if it happened. Which it doesn't.