Why Apple is Borrowing 17 Billion dollars

[Relentless]

Interesting read:
http://www.wired.com/business/2013/05/why-fabulously-wealthy-apple-is-borrowing-money/

[leg4]

Wall Street is buzzing about Apple issuing around $17 billion in bonds. What this means in simple terms is that Apple is borrowing billions of dollars, and paying out a small yield to the people and institutions that purchase the bonds Apple is offering.

This, of course, is the same tech company that is sitting on almost $150 billion in cash. So why would Apple borrow the money, when it already has so much of it sloshing around?

Apple CFO Peter Oppenheimer spelled it out during Apple?s recent earnings call. ?We are continuing to generate significant cash offshore,? Oppenheimer told press and analysts. ?And repatriating this cash would result in significant tax consequences under current U.S. tax law.? What he didn?t quite spell out was how significant those consequences are.

?Whopping,? is how Jennifer Blouin, associate professor of accounting at the Wharton School, describes it.

As Oppenheimer points out, if Apple brought its foreign cash back stateside, it would have to fork over 35% of it in taxes under current U.S. law. The U.S will give Apple credit for taxes it already paid to foreign governments, but by Blouin?s calculation based on Apple?s 2012 10-K, Apple?s estimated foreign tax rate on its hoard of foreign earnings (i.e. its permanently reinvested earnings) is?wait for it?0.84%.


More:

http://www.wired.com/business/2013/0...rrowing-money/

[CAHEK]

[Fat Panda]

typical corporate FREELOADERS. fuck apple!

[- Jesus Christ -]

Simple answer...

Collectivism has destroyed the free market.

[livexxx]

becasue they can?

[MaDalton]

funny how that works, huh? you put your money offshore and the IRS rips you a new asshole.

but when you're a multi billion company they give you extra money at a great interest rate

[TheSquealer]

Money always flows to the path of least resistance when it comes to taxes and regulation. Ironically idiots with strongest opinions on money and taxes also tend to spend their lives flowing to the path of least resistance.

[96ukssob]

Originally Posted by MaDalton

funny how that works, huh? you put your money offshore and the IRS rips you a new asshole.

but when you're a multi billion company they give you extra money at a great interest rate

I wonder how the IRS ever makes any money with all these loop holes and tax breaks.

[Rochard]

Originally Posted by bossku69

I wonder how the IRS ever makes any money with all these loop holes and tax breaks.

I don't understand how people pay taxes. Or why. Fuck, write everything off.

[BareBacked]

Originally Posted by Rochard

I don't understand how people pay taxes. Or why. Fuck, write everything off.

LOL amazing post

[eroticsexxx]

Originally Posted by leg4

if Apple brought its foreign cash back stateside, it would have to fork over 35% of it in taxes under current U.S. law. The U.S will give Apple credit for taxes it already paid to foreign governments, but by Blouin?s calculation based on Apple?s 2012 10-K, Apple?s estimated foreign tax rate on its hoard of foreign earnings (i.e. its permanently reinvested earnings) is?wait for it?0.84%.

Exactly right.

To go from less than a percent of taxes to 35% is insane.

[bronco67]

So if taxes were lower, maybe more business wouldn't take their money overseas -- and the government would end up making more. In reality, they would still do it because they don't want to pay any fucking taxes...meanwhile I make jack shit and have to give up a good part of my income. Fuck Apple and all of those other big companies that skirt the system.

[KillerK]

Originally Posted by Rochard

I don't understand how people pay taxes. Or why. Fuck, write everything off.

It's easy to pay no taxes like you. But I don't want to limit my earnings to $50k a year.

[Supz]

Originally Posted by bronco67

So if taxes were lower, maybe more business wouldn't take their money overseas -- and the government would end up making more. In reality, they would still do it because they don't want to pay any fucking taxes...meanwhile I make jack shit and have to give up a good part of my income. Fuck Apple and all of those other big companies that skirt the system.

They aren't really skirting the system. its not like they are dumping US money offshore. This is money that was spent on apple products overseas. Not in the US. So They are manufactured outside the US, and sold outside the US. Why would they pay US taxes on them?

[OneHungLo]

Originally Posted by Rochard

I don't understand how people pay taxes. Or why. Fuck, write everything off.

Let us know how that pans out in an audit.

[MrMaxwell]

So let's recap

Apple sells its pure garbage no one needs all over the united states which is a HUGE chunk of its business. Then it decides to bank massive amounts of money overseas where they don't pay much taxes.

Am I getting that about right? Or am I way off?

You know, this country is run as if there were a magical herd of retarded monkeys with super powers who are able to assrape the masses at will with total impunity.

Here's a wild idea: Let's lower taxes in the USA and 95%+ of huge businesses won't be circumventing our tax codes which causes them to end up sucking money from our economy and paying taxes to other countries, instead.

Not to mention what lower taxes would do for the business climate (small and large) overall. The greedy money hole loving idiots would make MORE in taxes by charging LESS if you ask me.

[Supz]

Whats the rate on bonds

[DWB]

Originally Posted by Supz

They aren't really skirting the system. its not like they are dumping US money offshore. This is money that was spent on apple products overseas. Not in the US. So They are manufactured outside the US, and sold outside the US. Why would they pay US taxes on them?

You beat me to it. Not to mention, they do pay taxes in those other countries. It just happens to be a lot lower than what they would pay in the USA. That is how international business works. If the US based company then brings that money back into the USA, they get penalized for doing so. I'm actually surprised anyone repatriates money earned abroad.

So now they want to borrow money to do X instead of repatriate money and lose 35% of it for no real reason other than the IRS wants it. That is a no brainer. Good for Apple.

[SomeCreep]

Apple is pretty smart.

[- Jesus Christ -]

DWB,

When discussing bitcoin you repeatedly make arguments based on "THE GOVERNMENTS GONNA COME GET YOU". Yet, when apple avoids taxes.

Originally Posted by DWB

Good for Apple.

Once again... I must request that you remove references to Socrates from your sig, his corpse is flopping about like a fish.

[DWB]

Originally Posted by - Jesus Christ -

When discussing bitcoin you repeatedly make arguments based on "THE GOVERNMENTS GONNA COME GET YOU". Yet, when apple avoids taxes.

Apple isn't avoiding taxes. They pay them in all the countries they operate in. They operate within the legal boundaries of the law and use that to their advantage. Not repatriating money earned abroad is not illegal.

Bitcoin is an unregulated currency being used for illegal activity, including the sale of drugs, firearms, child porn, and people via human trafficking, not to mention being used for money laundering. So yea, there is a high chance of government regulation or crackdown of some kind, if for no other reason than it is a competing currency, which historically doesn't work out too well.

I'm a bit surprised I even had to explain the difference between the two. But then again, that explains your next comment...

Originally Posted by - Jesus Christ -

Once again... I must request that you remove references to Socrates from your sig, his corpse is flopping about like a fish.

Once again.... figure out what slander means and get back to me.

[- Jesus Christ -]

I explained to you once already that I'm not directly talking about the quote. Socrates was all about logic. You are doing all kinds of verbal acrobatics to AVOID logic.

Someone can view child porn on apple products. Someone can conduct a drug deal on an IPhone.

You are willfully ignorant and an enemy of all free men.

[pornguy]

The US government gives a tax break on money earned outside the US but still wants to tax if the money comes in.

What apple is doing is smart.

[Lykos]

Wow, this is interesting indeed...

[- Jesus Christ -]

Originally Posted by pornguy

gives a tax break

It's interesting how much word choice says about a persons perspective.

The government isn't GIVING anything, the government is simply STEALING less.

[purecane]

the CEO's name is oppenheimer.....research that family and you'll see how apple gets away with this shit.

[Relentless]

The 'news' here has very little to do with taxes and a lot to do with the end of nationalism.

In the past the success of a company was tied directly to the country, region, city and society it was part of, no matter what industry it was in or where sales were generated. Take Hershey as an example, they built a massive business for its time and created a thriving town in Pennsylvania as a direct result. They sold their products globally but worked under the ethos that their employees, country, government and the society around them were vital to their continued success.

In the modern era, rightly or wrongly, that ethos is gone. Companies do not feel any connection to society, and neither do wealthy oligarchs. They feel no obligation to the people who work for them, live in cities near their factories, provide a consumer base for their products or a tax base for the infrastructure they utilize. More than that, they see zero connection between their success (past, present or future) and society around them.

Rather than a period of symbiotic capitalism that promotes a healthy and prosperous relationship between corporations and society, which would allow capitalism to flourish for centuries... we are headed deeper into the abyss of confrontational capitalism where corporations and society fight with each other continually to the detriment of both.

[arock10]

Originally Posted by purecane73

the CEO's name is oppenheimer.....research that family and you'll see how apple gets away with this shit.

You mean CFO

[DWB]

Originally Posted by - Jesus Christ -

I explained to you once already that I'm not directly talking about the quote. Socrates was all about logic. You are doing all kinds of verbal acrobatics to AVOID logic.

My logic is sound. My sig is about slander.

When Apple breaks the law let me know and I'll adjust my comments about it. In the meantime, you should try to educate yourself on how international business and tax law works.

Originally Posted by - Jesus Christ -

Someone can view child porn on apple products. Someone can conduct a drug deal on an IPhone.

That's honestly the best reply you could come up with?



The fate of Bitcoin isn't for me to decide. But I don't see any reason to stick my head in the sand about the reality of the situation. You can day dream all you want about it, but it won't change the facts.

Originally Posted by - Jesus Christ -

You are willfully ignorant and an enemy of all free men.

Says the guy who doesn't understand that Apple isn't breaking the law and thinks there is no risk to Bitcoin.

You know, I like you better when you post as JohhnyClips. At least on that account you're a little bit funny.

[DWB]

Originally Posted by pornguy

The US government gives a tax break on money earned outside the US but still wants to tax if the money comes in.

What apple is doing is smart.

It is smart, and I don't blame them. No reason to have 35% of your money taken for bringing it back to the USA, especially since it was earned abroad.

Originally Posted by - Jesus Christ -

The government isn't GIVING anything, the government is simply STEALING less.

In other news, have you heard about gravity? It holds us to the planet and you can't escape it. Bummer, huh?

[notjoe]

Originally Posted by DWB

Apple isn't avoiding taxes. They pay them in all the countries they operate in. They operate within the legal boundaries of the law and use that to their advantage. Not repatriating money earned abroad is not illegal.

Bitcoin is an unregulated currency being used for illegal activity, including the sale of drugs, firearms, child porn, and people via human trafficking, not to mention being used for money laundering. So yea, there is a high chance of government regulation or crackdown of some kind, if for no other reason than it is a competing currency, which historically doesn't work out too well.

I'm a bit surprised I even had to explain the difference between the two. But then again, that explains your next comment...



Once again.... figure out what slander means and get back to me.

It's also being used for legitimate reasons. I bought a monitor using Digital Currency.

[xNetworx]

Originally Posted by KillerK

It's easy to pay no taxes like you. But I don't want to limit my earnings to $50k a year.

Countdown to Rochard's first audit....3.....2.....

[_Richard_]

Originally Posted by leg4

Wall Street is buzzing about Apple issuing around $17 billion in bonds. What this means in simple terms is that Apple is borrowing billions of dollars, and paying out a small yield to the people and institutions that purchase the bonds Apple is offering.

This, of course, is the same tech company that is sitting on almost $150 billion in cash. So why would Apple borrow the money, when it already has so much of it sloshing around?

Apple CFO Peter Oppenheimer spelled it out during Apple?s recent earnings call. ?We are continuing to generate significant cash offshore,? Oppenheimer told press and analysts. ?And repatriating this cash would result in significant tax consequences under current U.S. tax law.? What he didn?t quite spell out was how significant those consequences are.

?Whopping,? is how Jennifer Blouin, associate professor of accounting at the Wharton School, describes it.

As Oppenheimer points out, if Apple brought its foreign cash back stateside, it would have to fork over 35% of it in taxes under current U.S. law. The U.S will give Apple credit for taxes it already paid to foreign governments, but by Blouin?s calculation based on Apple?s 2012 10-K, Apple?s estimated foreign tax rate on its hoard of foreign earnings (i.e. its permanently reinvested earnings) is?wait for it?0.84%.


More:

http://www.wired.com/business/2013/0...rrowing-money/

can you imagine being forced to pay a 35% tax rate on income?

so brutal.

[JP-pornshooter]

Originally Posted by DWB

You beat me to it. Not to mention, they do pay taxes in those other countries. It just happens to be a lot lower than what they would pay in the USA. That is how international business works. If the US based company then brings that money back into the USA, they get penalized for doing so. I'm actually surprised anyone repatriates money earned abroad.

So now they want to borrow money to do X instead of repatriate money and lose 35% of it for no real reason other than the IRS wants it. That is a no brainer. Good for Apple.

I thought any US entity was tax liable to uncle Sam regardless where the money is earned, and regardless of where the funds are physically located.

[Relentless]

Originally Posted by JP-pornshooter

I thought any US entity was tax liable to uncle Sam regardless where the money is earned, and regardless of where the funds are physically located.

That's the whole point....

Large corporations are not 'US Entities', they aren't "EU Entities", they are completely disconnected from the health, success or prosperity of the places they profit from. The idea of a 'multinational corporation' is obsolete... they aren't multinational any more... they are completely distinct from the societies that support them.

[epitome]

Trust, all of that money wasn't earned abroad. Like other companies a lot of it was shoveled out of the U.S. into lower/no tax jurisdictions using "patent licenses" and other creative loopholes.

Create the technology in your home country, offshore the rights to it.

It's been done forever and it won't stop because people make blanket statements like "that money was earned offshore."

Gotta love a company that puts Cupertino on every product trying to draw away from the fact that it was made in China, only to keep their money offshore, too.

The back of an iPhone should say "Designed by Apple in Cupertino. Made in China. Your Money Went to Ireland."

[Relentless]

Originally Posted by epitome

The back of an iPhone should say "Designed by Apple in Cupertino. Made in China. Your Money Went to Ireland."

No it didn't.
Your money didn't go to Ireland either in any appreciable sense. It may have visited Ireland, but it will almost certainty not be significantly taxed by Ireland or get spent in Ireland.

[MrMaxwell]

Well, I guess if it's money they didn't even make here, that's okay. I fucking hate apple but you can't blame them for not wanting to be fucked out of money they made overseas. I suppose.

[Juicy D. Links]

Originally Posted by CAHEK

[_Richard_]

Originally Posted by OneHungLo

Let us know how that pans out in an audit.

it's just a wink wink nudge nudge situation

[beerptrol]

Why tie up 17 billion of your own money, when you can use other peoples money at a low interest or cost to you

[2MuchMark]

Originally Posted by beerptrol

Why tie up 17 billion of your own money, when you can use other peoples money at a low interest or cost to you

That is EXACTLY right.

First in case anyone didn't know, it is currently very very cheap to borrow money. Try going for a car or house loan and they will trip over themselves to give you the loan at super low interest and give you all kinds of crazy incentives.

Also, big companies do this all the time. Here in Montreal there's a company called Bombardier. They are known for making snowmobiles but they also build passenger jets and other planes. They have an amazing scam going on. They borrow money from the government to bid on a contract, and borrow again to build the plane. The government awards them the money up front which is quickly invested and makes crazy interest. They also get crazy tax credits for being a job creator in Montreal. I wouldn't be surprised if they never spend a dime of their own money for anything. The loans are always insured of course meaning that neither they nor the government takes any real risk.

If you think this is nuts, just look into big oil and how they get and spend money. It'll make you sick.

[Dankasaur]

Originally Posted by Supz

They aren't really skirting the system. its not like they are dumping US money offshore. This is money that was spent on apple products overseas. Not in the US. So They are manufactured outside the US, and sold outside the US. Why would they pay US taxes on them?

[epitome]

Originally Posted by Relentless

No it didn't.
Your money didn't go to Ireland either in any appreciable sense. It may have visited Ireland, but it will almost certainty not be significantly taxed by Ireland or get spent in Ireland.

Yup, the ol double irish with a Dutch sandwich accounting trick.

Ends in the Cayman islands.