Re:Apple's cash hoard swells to $246B
by deepnotderp on Saturday April 15, 2017 @03:30PM
(#14122395)
Corporations shouldn't get taxed only if they reinvest the money. More often than not, it's stashed in the Cayman islands or some other tax haven.
Yea, the money in the Cayman islands is "invested", it's earning interest only because it's being loaned out to other businesses.
But my point is rather than trap US capital in overseas bank accounts earning limited interest, it's far better to have it brought back to the US and invested directly in businesses (or returned to shareholders).
Imagine Samsung builds phones in China. It's chinese subsidiary has to pay Chinese taxes on the profits from selling those phones. But it doesn't have to pay income taxes to the US on them.
Now Apple builds phones in China. It's Chinese subsidiary has to pay China income taxes on the profits from selling those phones. Now it also has to pay and additional 40%+ income tax combined to the US & the state of California, all because the subsidiary is owned by Apple USA?
Samsung would say, thank you US tax code! Our high end Galaxy phones can now sell for substantially less than iPhones and we'll get even more market share!
The way things are today is and enough. Apple still owes that 40% whenever the subsidiary pays those profits back to Apple US. Hopefully they'll pass a repatriation bill so the federal rate will drop to 12% or so (20%ish with CA state income tax), and Apple will bring the profits back.
You should really think about whether corporations should pay any income taxes at all. Profits are either reinvested in growing the business (and creating jobs), or paid to shareholders, who already have to pay taxes on them. Double taxing profits before they can be paid to shareholders, or single taxing them before they can be reinvested, is a significant disincentive to investing in the US. It's trapped trillions in US capital overseas.