And just wait until the "repatriation" thing happens. Hundreds of billions in overseas money will flow back into the US (not just Apple, mind you).
And be distributed to shareholders and company execs and other 1%'ers. The rich will simply become richer. IMO It will not be used to invest in plant, equipment and job-creation opportunities, and will not benefit the average American.
It depends on how the U.S. government handles this. They could offer a repatriation of money with lower tax or zero tax IF those monies are used specifically to fund manufacturing and jobs creation. Dunno... seems like a recent thing to do.
In which case companies that were already going to invest inwardly will be able to offset that investment with zero tax foreign earnings, to no actual gain to the country. And companies with no plans for inward investment will find some con to claim investment for the tax relief while doing practically nothing.
Tax holidays are a con. Tax incentives and loopholes are a con. Unitary taxation is the only way to tackle multinational profit sheltering that makes sense.
I wouldn't say it's not the government's business to tell companies what they should do with their money. In fact, that's the very business they are in because their revenue stream comes from taxes. Businesses are given a license to operate in the country and the country provides services and capital to allow the company to function. Things like human resources, education, infrastructure (roads, electricity, water, sewer, public transportation), safety, crime prevention, military protection... the government does a lot to make companies able to exist in the country.
That being said, government does indeed tell a company what it can and should do with its profits through something called "taxes". They can provide incentives for a company to do some things that the government believes is beneficial. So for instance, if they install clean power, or make investments into infrastructure or create jobs or spend money on manufacturing or education, they can and SHOULD get a tax credit because that is not money that the government needs to spend to do those things.
In other words... the government should incentivize the behavior that it desires. If the behavior it desires is job creation and manufacturing, then it ought to give companies an incentive to repatriate capital to go towards those projects that it values.
Of course the corporations are free to distribute taxes to shareholders, whom in turn should be taxed as well, which would effectively double tax those shareholders (once to repatriate and once for capital gains). It's these methods that government can use to guide behavior. Otherwise you're looking at a bigger government that collects more taxes to do these things itself which is not friendly towards private enterprise.
And just wait until the "repatriation" thing happens. Hundreds of billions in overseas money will flow back into the US (not just Apple, mind you).
And be distributed to shareholders and company execs and other 1%'ers. The rich will simply become richer. IMO It will not be used to invest in plant, equipment and job-creation opportunities, and will not benefit the average American.
Well, it's some of this, and some of that. First of all, it isn't the government's business to tell companies how to spend their profits. It's up to management, and yes, investors.
what people,who don't really understand economics think, is that dividends aren't useful to the economy. That's wrong. Many people hold a stock, not just the rich. All of those people benefit. I'd bet that most of Apple's stock will go to people who own funds with Apple, and small investors. Even hedge funds pay out from dividends.
while I'm not in favor of stock buybacks, I'm sure some of that will happen as well. And that's the company's business.
its a mistake to think that a company's primary purpose it to benefit others. The business of a company is to make a profit for their shareholders. And these shareholders invest in the company, which gives it the money to do what it needs to, for a number of reasons. Don't like that, then don't invest!
but there is only so much money that a company can use. Cook mentions that Apple produces more cash than they need to run the company. The general effect is to give a lot of that money back to investors. That's actually a good thing.
but, of course, if a company has a good amount of money, and is in an industry where a large amount of R&D is done, and a large amount of manufacturing is done, then it will spend at least, some of this money towards that. As Cook reiterated in his interview with Cramer tonight, Apple spent $50 billion for parts and materials here in the USA last year for USA sourced components. Anyone who doesn't think that's a lot should go back under the rock they live under.
they also have been trying to manufacturer Mac Pro models here for years, 2013, to be exact, long before Trump came on the scene. I've no doubt they would be happy to do more, if conditions are right, and perhaps, with all his faults, and that's most of his thinking and policies, Trump may get this one thing right.
and just remember that we're just about the only country that taxes profits made out of the country when a company wants to bring them back. That just hurts us.
Comments
Tax holidays are a con. Tax incentives and loopholes are a con. Unitary taxation is the only way to tackle multinational profit sheltering that makes sense.
That being said, government does indeed tell a company what it can and should do with its profits through something called "taxes". They can provide incentives for a company to do some things that the government believes is beneficial. So for instance, if they install clean power, or make investments into infrastructure or create jobs or spend money on manufacturing or education, they can and SHOULD get a tax credit because that is not money that the government needs to spend to do those things.
In other words... the government should incentivize the behavior that it desires. If the behavior it desires is job creation and manufacturing, then it ought to give companies an incentive to repatriate capital to go towards those projects that it values.
Of course the corporations are free to distribute taxes to shareholders, whom in turn should be taxed as well, which would effectively double tax those shareholders (once to repatriate and once for capital gains). It's these methods that government can use to guide behavior. Otherwise you're looking at a bigger government that collects more taxes to do these things itself which is not friendly towards private enterprise.