Come on Moody’s, Spare us these Falsehoods: That $1.3 Trillion “Overseas Cash” is Already in the US

Moody’s turns into tax lobbyist for its biggest corporate clients.

Some falsehoods simply refuse to die. No matter how many times they get stabbed in the heart, and no matter who stabs them, they rise again in their full glory.

The falsehood that a vast amount of US corporate cash, including much of Apple’s $250 billion, is “locked away overseas” is one of them. We’ve known since May 2013 from the Senate subcommittee investigation and hearings into Apple’s tax-dodge practices that a big part of corporate “overseas cash” is actually invested in the US.

Now Moody’s Investor Services repeats the same falsehood and explicitly lobbies Congress to give our poor, multinational Corporate Titans with their hardscrabble businesses another tax break.

The biggest US non-financial companies that pay Moody’s to rate their credit worthiness “will increase their cash holdings to $1.77 trillion by the end of the year, from $1.68 trillion at the end of 2015,” Moody’s writes. And it goes on:

Most of the cash that companies have is generated and being held overseas. Moody’s estimates that the amount of overseas cash will reach about $1.3 trillion, or 74% of total cash, in 2016. That’s up from an estimated $1.2 trillion, or 72% of total cash a year earlier.

For US tax purposes, these funds are classified as “permanently invested overseas” and thus are exempt from federal corporate income tax until they’re “returned” to the US. These overseas cash holdings have “more than double in the last ten years,” Moody’s reports.

By contrast, US individuals have to pay federal income taxes on all their income, even income they earn from overseas sources while living overseas. The US is one of only a few countries that mistreats its citizens that way. But the largest corporations are coddled and get very special treatment.

On the forefront are our Tech Titans, which have on their books “almost half” of all cash “held by US non-financial companies. These are the top five “cash holders”:

  • Apple
  • Microsoft
  • Google parent Alphabet
  • Cisco
  • Oracle

And this is what Moody’s has to say about Apple’s wondrous cash hoard, much of it overseas:

Based on Apple’s reported results for its fiscal year that ended in September, Moody’s projects the company’s cash will exceed $250 billion by the end of calendar 2016, representing over 14% of total non-financial corporate cash.

And then it dives straight into tax lobbying, in behalf of its clients, directed straight at Congress:

“Without tax reform that reduces the negative financial consequences of repatriating money to the US, we expect offshore cash levels to continue increasing,” said Richard Lane, a Senior Vice President at Moody’s.

The financial media jumped on the bandwagon and quoted this falsehood for mass consumption in order to pressure Congress to give our multinational corporate heroes another opportunity to dodge taxes, on top of the countless opportunities already written into the tax code for them that small businesses don’t have access to.

But here’s the thing. In May 2013, Apple got into a pickle because it had decided to fund its stock-buy-back and dividend program by taking on a record $17 billion in debt rather than “repatriating” part of its “offshore” cash and paying income taxes on it.

The Senate subcommittee investigation and hearings, chaired by Senator John McCain, showed that Apple had sheltered at least $74 billion from US income taxes between 2009 and 2012 by using a “complex web” of offshore mailbox companies. The investigation found untaxed “offshore” profits of $102 billion held by Irish subsidiaries – which Apple refused to “repatriate” in order to keep that income from being taxed in the US.

But according to the Senate report, Apple doesn’t have to repatriate that moolah because it’s already in the US. The Irish mailbox subsidiaries, on whose books this money is for tax purposes, transferred it to Apple’s bank accounts in New York. The money is managed by an Apple subsidiary in Reno, Nevada, and is invested in all kinds of assets in the US. Apple’s accountants in Austin, Texas, keep the books,

Money doesn’t stop at borders. Tax accounting does.

These revelations explained another corporate mystery that had long baffled economists. In 2004, after heavy lobbying by our Corporate Titans, Congress declared a “repatriation holiday” to encourage the “return” of $300 billion in overseas cash to be invested in the US. This would cause a burst of investment and hiring in the US, it was said. This was similar to what Moody’s is now clamoring for on behalf of its clients, except this time, they want permanent tax reform rather than a one-time “repatriation holiday.”

So in 2004, our heroes made some adjustments on their books to “repatriate” these profits that were then taxed at the special and minuscule rate of 5.25%, less than the payroll taxes withheld from their US working stiffs.

And then nothing happened. There were no investments and no hiring and no benefits for the economy because the money had already been deployed in the US, as we now know. In May 2013, as a result of the Senate hearings, the New York Times summarized the 2004 phenomenon this way:

On the contrary, some of the companies that brought back the most money laid off thousands of workers, and a study by the National Bureau of Economic Research later concluded that 92 cents on every dollar was used for dividends, stock buybacks or executive bonuses.

This sort of “repatriation holiday” or tax reform would simply be a handout benefitting our Corporate Titans, but not the millions of smaller companies that don’t have the resources to lobby Congress, make special deals with foreign governments, and create that “complex web” of offshore mailbox companies. They’re too busy struggling on a daily basis in their dog-eat-dog world.

Subcommittee Chairman John McCain thundered in his opening statement of the hearings that it was “unacceptable that corporations like Apple are able to exploit tax loopholes to avoid paying billions in taxes.” Since then, nothing happened in Congress. The loophole wasn’t closed. And the falsehoods that had been stabbed many times during the hearings have once again risen to shine in even greater glory, with Moody’s adding some additional sparkle.

Hot air keeps hissing out of IPOs. Read…  What the Heck’s Wrong with This Market? Biggest IPO of the Year Sags to New Low

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  81 comments for “Come on Moody’s, Spare us these Falsehoods: That $1.3 Trillion “Overseas Cash” is Already in the US

  1. Duane Snyder says:

    I am sure there are many paid off corrupt politicians who would go to bat for these “tech titans” and portray them as the real victims. They would explain that our overly complicated tax system leaves corporations with no alternative than to engage in fraud.
    God bless the job creators whose feet (or is it shoes?) I am not fit to lick.

    • madame de farge says:

      Remember Warren Buffett is probably the largest investor in Moody’s (remember when he sold the Moodys stock in the Wells Letter time frame…of course it was a programmatic sale, this man never trades himself and if you believe that…well then…Also it just happened that he got a 2 billion dollar tax credit when the IRS bailed out Wells Fargo…. Talk about WELFARE QUEENS, he, Jamy dimon and his friends at GS make down home welfare queens look CHEAP…. MOODY”S who labeled securities as TRIPLE A because that is what the Banks demanded….

  2. Chicken says:

    Yet another good example of how US citizens are constantly being mislead by legislators, into believing falsehoods on behalf of special interest groups.

    McCain is obviously talking someone’s book, Moody’s employer perhaps?

  3. Curious Cat says:

    I find myself more and more frequently wondering if democracy as we know it will survive. The problems we face are more complex than the guardians of our way of life (specifically voters, the judiciary and the press) are able to comprehend. The national attention span continues to diminish while the national voice is raised more and more loudly in anger. The large institutions, corporations, banks, the Fed, are smart enough to understand their opportunities and aggressively move forward to take every advantage for themselves and their individual constituents. Their strategy is working well.

    Whenever there is a threat the population cries out for more freedoms to be confiscated in the vain hope that they will ultimately become safe. (E.g. Go ahead and bug my phone and my internet traffic if it’s gonna keep me safe.) Does no one recall Joe McCarthy or Richard Nixon or what Franklin said about liberty and safety?

    • c141nav says:


    • Petunia says:

      Have you noticed that they keep referring to the US as a capitalist country more and more. We used to be considered a democracy, but the not so free market has replaced it.

    • walter map says:

      “I find myself more and more frequently wondering if democracy as we know it will survive.”

      The good news is that the U.S. does not actually have a democracy.

      Unfortunately that’s also the bad news.

      Democracy is doing very well in the more socialist countries. Democracy is antithetical to corporatism, which is why you do not find functioning democracy in countries dominated by big corporations.

      As Marx said, democracy is the road to socialism. For similar reasons the status of women tends to be higher in democratic, socialist countries than in those that are corporatist and anti-democratic. Corporatism cultivates a culture of exploitation in which women are particularly and differentially exploited.

      • madame de farge says:

        It is not just women, it is also class, color, and ethnicity, etc. DIVIDE, DENY, DISTRACT, DELAY……. that is how you hold the little people down while you rip off their wallets…

  4. Ptb says:

    Didn’t Moody’s rate all that garbage in 2007 as AAA?

    • Petunia says:

      I would like to point out that Moody’s was one of Warren Buffets biggest investments, and some of the biggest investors in Moody’s are other financial firms. Why would anybody trust the ratings of a financial firm owned by some of its biggest customers.

      • chris Hauser says:

        they charge “people” for ratings which they, the “people” then use to get money to pay “they” (the original they) for the ratings. the chicken laying the egg it hatches from.

        perhaps there is no other way, unless invented.

        shouldn’t have sold my mco stock, it was a permanent annuity.

        • Ptb says:

          Kind of like paying yourself for giving yourself an AAA rating. Great work if you can get it.
          Gov is ok with this but created onerous regulations and rules for the home appraisal business (which is a type of rating for investment purposes) so that banks and borrowers could not play the mortgage business. Double standard much? No, just business as usual at the pay for play house.

      • Frederick says:

        It really makes you wonder right?

  5. Justme says:

    I suspect it is the same way when someone has an offshore bank account in, say, the Bahamas. The money really is on deposit at BNY-Mellon or equivalent in New York. I mean, come on, who would actually offshore their funds if they were really held in trust in the Bahamas? The risk would be too high. Tell me if I’m wrong.

    • Petunia says:

      Most of the banks in the Bahamas would be familiar to everybody. They are offshore subsidiaries of the major banks.

    • Chicken says:

      Despite what some erroneously believe, the bankers you speak of are in reality offshore entities themselves in the sense they have no special obligation to the countries in which they operate, ethical or otherwise.

      And since they’re convicted criminal enterprises (yet insiders are exempted from prison) implies insiders are immunized while shareholders and taxpayers are repeatedly left holding the bag.

      “It’s all perfectly legal” except shareholders are penalized.

  6. Lee says:

    “By contrast, US individuals have to pay federal income taxes on all their income, even income they earn from overseas sources while living overseas. The US is one of only a few countries that mistreats its citizens that way.”


    The word should be ‘screwed’.

    From banks accounts, filing requirements, social security, and on and one we get the shaft.

    We are treated more like criminals than ‘citizens’.

  7. walter map says:

    “The word should be ‘screwed’.”

    The U.S. is also one of those countries which often taxes the poor more than it taxes the rich. The typical working stiff pays more in federal taxes than Trump and more in taxes than dozens of big corporations combined.

    There was a time when only the very rich paid U.S. federal income taxes, so having to pay those taxes was something of a status symbol. Since then the rich have militated to push the burden of taxation down the social strata, in large part to generate resentment of taxes.

    Nowadays, of course, the rich have persuaded people to reduce and even eliminate taxes on the wealthy, on the pretext that this will somehow ‘create jobs’ when the reality is precisely the opposite. The plain fact is that the so-called ‘job creators’ have destroyed millions of U.S. jobs and are still subsidized by the government to move millions more overseas, directly and indirectly.

    • Dan Romig says:

      Again, I advocate for a modified flat tax. A basic living wage, say $2,000 per month, should have no federal tax liability. Every penny after that in wages, carried interest, dividends and/or capital gains should be taxed at a fixed percentage – no matter how much income comes in above the 24k per year.

      Progressive taxation where one pays a higher percent the more one succeeds is the textbook definition of greed and avarice from those Democrats (and others) who advocate it.

      • d says:

        And what of corporations, are they to continue paying noting, or return to paying a similar average % of their incomes, as citizen’s, after deduction’s???

        The currently pay much less than citizens after deduction’s.

      • madame de farge says:

        Of course, you are accounting for ALL taxes including sales taxes, gasoline and liquor taxes, cigarette taxes, REAL ESTATE taxes and Unemployment taxes…. SIMPLIFICATION that will never happen… You will always have people like Buffett and TRUMP who collect and keep taxes, including SALES TAXES and STATE INCOME TAXES and who get Secret IRS letters so that they can avoid taxes…..entirely…. Remember Buffett only takes a Salary of 100,000 so that all the rest of his income is from Realized Capital Gains and his lawyers make sure to minimize those…

  8. John Doyle says:

    The utter incompetence of the ratings agencies should be clear to anyone with understanding of finance.
    Bill Mitchell takes up the cudgel here;

  9. Islander says:

    Another insightful article sharing data that is hardly covered anywhere else! Thank you Wolf. I have a directly related point: How do you find these public data sources? Mis and Un information are a great, paradoxical, and deeply troubling problem of our whole society, which we all (blue and red) agree on. Google can give us 500.000 results but none relevant for our deepest interests. Weve learned to have low expectations. And no one ever even goes to the second page, it’s just garbage there.

    My own info comes mostly from bloomberg, though i scatter feed on tons of other resources all across the spectrum. And also think tank reports when someone kindly mails them to me, sci journals and just traveling and connecting with people. I’m putting tons of energy into this (it pays my bills) and still find it hard. Being well informed is probably impossible with a regular job! That’s a darn shame, and dangerous for all of us.

    So what are your most cherished news sources? Yes we have way too little of them, and all, though relevant to everyone, are hidden behind pay walls the vast majority have no means or personal interest to scale. That’s a shame, as access to the press and quality information would benefit us all, just as doing science benefits all but does little economic good for the individual researcher. It’s a society wide benefit.

    So wolf please share, and in the meantime here are my top three FREE news sources (aggregators) besides yourself: (great site for layperson overview review of new scientific discoveries)

    Btw I’m not trying to spook business from here, I’ll certainly keep reading:) But it’s an issue I’ve personally identified as having no press coverage whatsoever, yet deep relevance for us all. See our constitution: right to free press. Let’s find new and true meaning in that. Right to FREE press. The benefits would be enormous.

    It’s amazing that we have less reporters than in the 1940s, with twice the number of people and four times the complexity. No wonder we feel disconnected from what’s going on.

    • Wolf Richter says:

      “How do you find these public data sources?”

      I spend many hours every day, 7 days a week, sorting through stuff: all kinds of news sources and other websites, government reports, reports by private research organizations, banks, and others, central bank reports, my inbox where I get a ton of stuff by the hour….

      This is a big part of what I do (so you don’t have to do it), but it’s invisible except to our internet surveillance experts and my ISP (which can see everything).

      • Michael Fiorillo says:

        Well, your hard work is very much appreciated. Thanks.

      • KM Tang says:

        Wolf, We can never match you. Your passion. Your intellectual abilities, capablities and your wealth of experience. We can hopefully complement here and there with local content add-ons to your main dishes thereby stretching the fabric.

      • kitten lopez says:

        man, you are THE ONE for whom that quote couldn’t be MORE perfect for: “i cannot eat the amount that i’d want to puke!”

        thank you for your sacrifices. no wonder you swim in the bay each morning. gotta shake it OFF for real. WOW…

    • Chicken says:

      I’m sure the reason there are many fewer reporters per capita is not in favor of the citizen. Thus, it’s not funny.

    • Mark Hodge says: (how I found THIS site)

    • kitten lopez says:

      i know and agree, ISLANDER. that’s why i was stunned when i first stumbled upon this site, too. i don’t even remember HOW. but i fell in love with the comments section and that’s how i ended up even reading THIS article which i didn’t think i’d even understand. i read it because i saw comments growing and wanted to see what everyone had understood.

      then i read the article and it blew my brains all over my apartment again. I see why Walter Map said he needed a break. sometimes i get vertigo at how insane and how fast it’s all happening. and it’s speeding up because things are coming undone, so people are bearing down ever harder with the plastic clenched smiles to try and WILL everything to keep going…just a little LONGER…

      when it finally speeds up and people are starting to snap around me, that’s actually when i finally start to feel CALM. but this site gives me the corresponding REASONS that i need as i keep checking different moving barometers for my continued “sanity” in all this.

      everyone’s insane. WE all are. this sounds like a mythical thing but none of us are perfectly “clean” and of “sound mind” as we’re all drinking from the same water.

      as i can hear from your note to Wolf, you’re at that stage of disillusionment about where all this is going and just HOW FAR it’s already gone. yeah… no reporters. corporations are PEOPLE. this country was FOUNDED on slavery and exploitation and genocide…

      remember that commenter guy’s marriage that went south because he insisted on lying so much to marketers that his wife doubted where the truth began and a man without integrity and whingeing is a perpetually LIMP man to ANY woman. even and especially if she’s beating him into getting more crap.

      there’s nothing hotter to a woman than a man who never diminishes himself (and thus his god and his woman), for any meaningless stranger. but i don’t know anymore. i think my way of seeing things has gone the way of all those reporters from the 1940s you were talking about.

      anyhow, yeah.. this site. it goes a long way to acclimating you to the vertigo of WHAT THE FUCK despair you’ll routinely feel out there when reading what’s out there.

    • kitten lopez says:

      oh.. the reason i jumped from saying this country was founded on so much poison, and jumped to the guy who was proud of his clever ruse to lie to marketers, is to say the ingredients make what you have.

      it’s like when we all talked like valley girls as jokes, then started talking like that for REAL.

      Malcom X said the chickens were gonna come home to roost, and they are. this is what he was talking about.

      america’s incessant imperialism is haggard, threadbare… you can only control things through force for so long.

      and people are waking up. i’m finally seeing the heartbreaking moments of BEAUTY in the craps of the snaps…. finally… because i can deal with THAT. it’s REALITY.

      that’s what this site is. it’s like the smokers outside. even if you didn’t smoke you wanted to go out there with them because they were cast out, smelly, imperfect…. the COOL ones.

  10. walter map says:

    ‘That $1.3 Trillion “Overseas Cash” is Already in the US’

    Financial fungibility and the machineries of deception being what they, the true amount of wealth hidden away in any one country is anybody’s guess, and reasonable arguments have been made for estimates of the total ranging to well over $100 trillion. Several years ago, Interpol credibly reported having discovered records of $66 trillion stashed in Switzerland alone.

    Where does money go when it dies? The fractional reserve system of banking guarantees that a lot of it never really existed. As for the rest, only TPTB know for sure, and they have no need to count it too closely. Besides, all contemporaneous money is an ultimately an accounting fiction and you can just make it up as you go along anyway.

    The Cubs won, after all, so that means magic is loose in the world, and anything is possible.

    • Chicken says:

      I’m waiting for you to acknowledge your government is lying to you.

      • walter map says:

        I don’t temporize with Sunday dinner.

      • kitten lopez says:

        “I’m waiting for you to acknowledge your government is lying to you.”

        man, you two have me giggling OUT LOUD by myself. this is like some waiting for godot riff…

        Wolf… so this is just a money site, huh?


    • kitten lopez says:

      “The Cubs won, after all, so that means magic is loose in the world, and anything is possible.”

      i love this place. no rim shot. that was like seeing a woman’s slip by accident… usually you’ve got someone’s arm clenched in your jaw, but now we see your sense of romance and BEAUTY.

      perfect for sunday. thank you.

      yes… i agree with rivulets of blood running down my own chin… yes… ANYTHING IS POSSIBLE.

      that’s what i love about this place.

      all the haggard realists crawling back out of the swamp of despair, bringing back daisies clenched in their teeth from heaven to hell here on earth

  11. kayjay says:

    Thanks for printing this…… I read about this several years ago (don’t remember when) that the money stays in New York and not in Bermuda or the so-called “Treasure Islands” the word used by Shayson. It is a book-keeping entry on the part of the banks. Valuable service on your part to publicise this issue, especially for the “unwashed.”

    • Petunia says:

      All this offshoring to a mailbox drop in the Caribbean needs to stop. None of these companies operate in these offshore jurisdictions and Congress knows it when they pass the laws that allow these places to be used as tax havens. It is more corruption imposed on the people.

  12. Raymond Rogers says:

    I don’t understand this dog-in-the-manger mentaility. So we are suppose to make it a punitive act to bring money into the US economy from overseas? In my opinion, money brought fron overseas should not be subjected to a draconian tax rate. The same could be said about businesses opertains in the US.

    I don’t get this general anti-buisiness setiment that exists here. Certainly, I understand and agree that abuses such as the pharmaceutical get-rich-quick schemes should not be tolerated. But it should be pointed out that much of this is present due to the government intervention in destroying competition. Likewise, if a company spends it’s own (without government funding) capital, it shold be able to charge whatever it wants.

    Buisiness are a tool, or a method by which capital is created. Would you spite your neighbor if he had a lawn mower you did not have?

    It’s one thing to oppose subsidies, legislation that destroys competition, and people who who outright do not pay taxes, but most of this vitriol is unjustified.

    • Chicken says:

      I’m not sure what makes you think it’s an antibusiness sentiment, Wolf was just pointing out the capital is already here and we’re being mislead into thinking it’s not, by politicos and ratings agencies.

      It business had ethics, they’d set the record straight but that’s not their job.

      • walter map says:

        “It business had ethics, they’d set the record straight but that’s not their job.”

        And certainly not the job of barnyard fowl.

        • Wolf Richter says:

          It’s time to stop making fun of the names/aliases people have chosen. It gets old after a while. And it’s never really funny even in the beginning.

      • ML says:

        Are you being misled? Or is it more likely that you are interpreting the terminology literally rather than technically? I am not aware of any duty to educate those with no interest other than curiosity and wanting to be nosey as to the facts.

      • Raymond Rogers says:

        Much of what I said refers to the comments more than the original article.

        The problem with the article entails where the money was made. Even if it is indeed here, it was capital gained from citizens from other sovereign entities that were not subject to the jurisdiction of the IRS (whether that through complex arrangements or through tax treatise).

    • Wolf Richter says:

      Did you read the article? It seems not.

      What the article said, in summary, is that the money is ALREADY in the US! There is nothing to bring back. “Repatriating” that money is just a few accounting entries. The whole thing is a tax loophole created by Congress.

      You said: “I don’t get this general anti-buisiness setiment that exists here.”

      You’re fabricating this “anti-business sentiment” in your imagination – in part because you have not read the article.

      To give you the sentiment: Moody’s is spreading a falsehood, and with this falsehood it is lobbying for another permanent loophole in the corporate tax code that only the largest corporations can use, but that my own corporation will not have access to.

      I’m as pro-business as they make them. I’m in business myself. But pro-business doesn’t mean pro-falsehood. I want a level playing field and a fair tax code. And I want Moody’s to quit spouting off nonsense.

      • walter map says:

        “But pro-business doesn’t mean pro-falsehood.”

        A certain chicken of our aquaintance would have us believe that to be in business is to be devoid of ethics or morality, defaming ethical persons in business everywhere.

        I’m undecided on an appropriate chicken recipe.

        • Chicken says:

          Here’s where your void exists:

          “The whole thing is a tax loophole created by Congress.”

          Can you say: Pinto, or VW? So maybe this time the chicken has cooked your goose?

        • kitten lopez says:

          sorry, Wolf. i find them hilarious.

      • d says:

        Week late, ten dollars short, Moodys is only in front of the 8 ball when it is trying to sink a stock so warren can get it for nothing or as you so succinctly put it Lobbying for the Mega corporation’s.

        American “rating’s agency’s ” are a fraudulent joke.

        Buffets “I dont pay enough personal taxes” is all part of his game to have his business, that pay for so much in his life, tax free.

        Look at the % of the total tax take paid by business in the 1945, 1950 period, then look at the % today.

        Hence is Americas biggest problem. It is not that people dont pay enough, it is that corporation’s today effectively dont pay any.

        Step 1 to change this, is term limits. Throughout the entire system.

    • economicminor says:


      The government favors a few at the expense of the many in the USA. This is going to crash. It always has in history and this time it isn’t really different except to be rhyming. The extent this greed is good attitude has progressed over the last 30 years appears to me and apparently a awful lot of others is untenable. It is going to end. No one is benefiting from the way things are today except the few at the very top who effectively rule us. All this “Let them eat bread” attitude is not popular with probably 80% of the people. Maybe more.

      This is an epic crescendo we are about to witness over the next 5 to 10 years. So many of the cycles have peaked all at the same time. I recently listened to a video interview with Harry Dent and I tell you he spooked me.

      Since the turn of the century small business creation has been declining. Even while the markets peaked. Anyone who has studied the real world knows that most new jobs and most of the growth of the middle class came from new small business. This year that went negative.. In other words there has been a collapse of small businesses and we now have a contraction in the overall number of small businesses.

      This is very ominous. This just shows the extent by which this consolidation and monopolization has extended into our lives. I grew up when you could just go do something. Now there is a corn maize with hoops, at every corner is someone out with either a stop sign or their hand out for anyone to proceed. No wonder the number of small businesses has declined.

      When the only business is big and powerful. when the corporate monopolies rule, there will be no middle class. Only an indentured middle manager class and peons. I just don’t think it is going to end up there. I think we are going to have a revolution of some sort and chaos may rule for a while.

  13. Maximus Minimus says:

    Probably a sound assumption. Question is where do corporate entities, like… the Wolf Street empire keep their cash. I am sure not in savings accounts. It would be an ultimate irony if they did, and have it frittered away by inflation, or potential government confiscation. Oh, and they all know the official CPI is a BS, just look at their phone prices.

  14. chris Hauser says:

    well, either you own the business, or you work for it, that’s the bottom line.

    not having partners has its charms, too. but one does need help, and either the government helps, or doesn’t. knee jerk response would be that government is a hindrance, but it is a fact that navigating the system has rewards.

    which brings us back to the top.

  15. night-train says:

    Wolf: Changing the subject if I may. I watched a business talk show today on the BBC where the topic was the disruption in the container shipping industry. Thanks to the reports you have been doing for the past several months, I was well informed on the subject and could immediately recognize self-serving statements.

    Keep up the good work.

  16. Ptb says:

    Capital is either being parked somewhere for safekeeping or it’s being deployed somewhere for a return. Arguing that money is not coming into the US because of tax repatriation is kind of like saying there’s no return to be had that’s worth being in the US. Hard to believe.

    • Tom Kauser says:

      Why of course it ’tis. Its on the federal reserve balance sheet and its a risk free quarter of a percentage point. Everyone is doing it . mark to market accounting since Oct. Is giving money market funds a current yield due to the shift into government paper only funds. The need for liquidity is forcing these funds to provide a small yield which is risk free at present
      Seeing anything gain in my portfolio is a blessing? I remember laughing at 6% just 10 short years ago.
      50 trillion dollars being hoarded on balance sheets. PEAK UNCERTAINTY!
      Sidelines will turn bullish while I dollar cost average!

    • walter map says:

      “Arguing that money is not coming into the US because of tax repatriation is kind of like saying there’s no return to be had that’s worth being in the US. Hard to believe.”

      But it is believable. Honest statistics clearly show the U.S. economy is being liquidated in favor of low-wage, no-regulation countries. It doesn’t make sense to launder much money into the U.S. to invest in operations that are gradually getting closed out.

      It’s well beyond the control of any governance either way so don’t waste your outrage on it. The best thing you could do, or should have done already, would be to hedge against the outcome of the upcoming U.S. national elections. Try googling ‘hedge Trump’.

      • Ptb says:

        I noticed that there’s a certain amount of manufacturing coming back to the US. This is serious investment capital as the reason it’s coming back is the extremely high level of automation. The Sketchers facility in SoCal is one example that comes to my mind right away. Huge place, almost no employees needed.

        The framework going forward for large private sector US investment will probably involve facilities that don’t require hiring many employees. There’s still a lot of economic value to harvest from the US…the trick is ,and has been for the last 20 years, to sell into the US with the lowest costs possible. On shore facilities that require no employment surely will motivate more investment money. Environmental constraints are another matter. But the part where there’s no employment costs has got to be very enticing.

        • Chicken says:

          As you point out, there are other costs involved aside from labor and environmental regulatory, another expense is transportation of your manufactured goods to it’s endpoint.

  17. ray antley says:

    The way to tax global corporations is with a sales tax, consumption tax, or tariff. If you can induce corporations to be national rather than global, you can tax them much more effectively.

    • d says:

      America is a Corporate Oligarchy controlling a political duopoly.

    • d says:

      “The way to tax global corporations”


      The way to do it is to tax their GP, before any deduction’s or expenses with a penalty at that point, if their profit margin, as a %, is higher than the industry standard.

      Any time you tax a corporation, they increase prices, to return to their predetermined post tax margin. You have to stop them doing this, at the same time you tax them.

  18. DV says:

    As to Apple, it does look like most of thier profits come from “tax optimization”, rather than from operating activities.

  19. Bob says:

    As a corporate tax professional I can tell you that repatriations of overseas cash are taxed by the U.S., but there is an exception in the rules that allows foreign subsidiaries of U.S. companies to invest the money in U.S. treasuries and U.S. stocks without paying the tax. If you want to invest the money in your U.S. business through other means, you have to first pay the repatriation tax.

    • Willy2 says:

      – And what about when e.g. Apple Ireland lends money to Apple USA. Is that also taxed with the repatriation tax ?

      • Bob says:

        Yes, that would be considered a taxable repatriation. Therefore, Apple Ireland would not lend money to Apple U.S.A. unless they plan to pay the repatriation tax.

  20. Willy2 says:

    – I don’t get it. How can cash be outside the US and at the same time inside the US. Please give some details on how this works.

    • Wolf Richter says:

      The “cash” is NOT outside the US. Apple’s corporate entity in Ireland lists on its balance sheet some assets (cash, securities, other investments), but these assets are US assets held in US accounts. So on the books, this “cash” is in Ireland. In reality, it’s invested in US assets. And there is no cash in Ireland.

      • Willy2 says:

        (your reply reminded me of things one Michael Hudson ( has said)

        – No, disagree. The cash is still in Ireland. If that cash has been deposited in a US (based) bank then it’s technically also in the US (banking system). It’s NOT a US account, it’s an account in a US bank but held abroad. That’s a small but important difference. And that cash is also on the balance sheet of e.g. Apple. In other words, if Apple wants to use it then it can do so.
        – When that money is being transferred from the irish company to a US based company then Apple has to pay that 35% tax.
        – That irish cash is invested in US assets. Agree. And that that’s an “investment” because Apple Ireland has lent that money to Apple USA, creating a tax deduction (think: interest) for Apple USA.

      • Willy2 says:

        – Agree. There’s little or no cash in Ireland because Apple Ireland has lent the cash to Apple USA.
        – And those interest payments push Apple’s (USA) profits into the red. I wouldn’t be surprised to see that Apple USA actually has been losing money for decades.
        – The reason this is done is lower taxes. Corporate tax rate in the US is 35%, whereas the corporate irish tax rate is 12.5%.

        • d says:

          “– The reason this is done is lower taxes. Corporate tax rate in the US is 35%, whereas the corporate irish tax rate is 12.5%”

          With the use of the double Irish strategy the effective rate is ZERO on anything not produced in Ireland but routed through it.

        • economicminor says:

          AND our deficits grow while Apple and E.T.A.L. have the protection of the US laws and military. They get to live and work here but don’t have to support our overhead. So they get a free ride while those without big accounting firms and special tax situations pay the bills.

          This is why the HRC Cabal lost the election and why fully a third of the registered voters either didn’t vote or didn’t vote for one of the two offerings.

        • d says:

          Wake up Orange POTUS is already talking about a BIG tax amnesty to bring profits on shore and cutting corporate rates to 15 %.

          Also reducing rates on what is referred to as walk through earning, which just happens to be, how he gets most of his private funds.

          Last time there was such an amnesty, it was supposed to create employment. The money went on dividends. cash returned to shareholders, and buybacks, the employment created, was in china.

          Your so committed to beating a dead horse, you cant see you have seen sold a rotten pig, by an orange devil.

  21. Chuck says:

    Maybe it is this article that is misleading citizens. If as this article claims, That most of the funds have been brought back into this country” then what is the big deal if we reduce the corporate tax on any additional funds to be brought back into this country. It wouldn’t be that much according to this article. Furthermore, who do you think pays the corporate taxes? It is the consumer who pays it in the price of the products or services

    • Wolf Richter says:

      I think you misunderstood: the money (profits) has already been brought back WITHOUT being taxed (because it’s not OFFICIALLY back). That’s the whole purpose of this loophole. It’s just a tax dodge.

      • economicminor says:

        Couldn’t a corporation with overseas cash just borrow in the US using the overseas cash to make the payments and the interest paid is a write off.. So even if it costs them 2 or 3% that is so much cheaper than paying the US taxes. And they get to use or distribute the cash here anyway..

        • d says:

          No as they still have to repatriate the cash to the US system and pay tax on it before they pay the loan.

          What they do, is what apple did, borrow in the US and pay dividends, return cash to shareholders, and make investments, knowing if it ever goes wrong, they have the offshore cash to cover the debt.

          Then claim the interest on that loan against US taxes due.

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