A third of cash is owned by 5 U.S. companies


#1

The rising cash holdings of U.S. corporations is increasingly in the hands of a few U.S. companies, with just five tech firms having grabbed a third of it. And nearly three-quarters of cash held by non-financial U.S. companies is stashed overseas, outside the long arm of Uncle Sam.

Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Cisco Systems (CSCO) and Oracle (ORCL) are sitting on $504 billion, or 30%, of the $1.7 trillion in cash and cash equivalents held by U.S. non-financial companies in 2015, according to an analysis released Friday by ratings agency Moody’s Investors Service. That’s even more cash concentration than in previous years, as these five companies held 27% of cash in 2014 and 25% in 2013. Apple alone is holding more cash and investments than eight of the 10 entire industry sectors.

More:
usatoday.com/story/money/markets/2016/05/20/third-cash-owned-5-us-companies/84640704/


#2

I’ll never understand economics.
The whole argument for lowering taxes, deregulation, &c is that corporations will create jobs. If these companies are sitting on this much cash and not spending it on R&D or building new plants they should distribute it as dividends to stockholders.


#3

A lot of this cash is overseas, so if the company brings the money to the US to pay dividends, then they have to pay corporate income tax on the money.


#4

So what? You want it to change, get congress to pass laws that will cause these companies to want to invest that cash to make more cash. Right now the laws are written is such a way those companies make more by holding the cash than spending it.


#5

They are holding onto cash rather than spending on R&D or on acquisitions, or on paying dividends. Maybe they are expecting a global financial crisis and are hoarding cash as a precaution.


#6

And we should be concerned about this because?


#7

Literally a handful of businesses control the cash flow. That’s a lot of power for so few.

Maybe it’s always been that way in world history. I’d be curious to know whether there has always been few who control the many.

I don’t have a firm position whether this is a new development in the history of the world, or if the few are gaining more power over the many than historical trends. I also do not know if, even if that is true, whether that is necessarily something to be overly concerned about.

Nonetheless, I find it interesting that such a few number of people control so much cash, and as a result control it’s access.


#8

The one area of potential concern is tax policy. For example, Apple has a lot of money overseas that would be expensive to repatriate. Could there be tax policy changes that could free up international capital flows? That is something that neither party is interested in discussing. Another relevant question is should tax dodges such as the double irish with a dutch sandwich be legal? That is one of the reasons why Apple has so much money overseas.

Of course, the interesting thing is that Obama is portrayed as an anti-business president, yet corporate profits have done well during his administration, with the exception of the last year or so.


#9

So again, the US government needs to write laws that creates investment opportunities for these companies. We need to lower corporate taxes to 0%. Not create loopholes so they pay 0%, just remove all corporate taxes for companies.


#10

Agreed As it is corporate income is taxed twice . Once when earned and again when it is distributed as dividends


#11

Close to 40%, if I remember correctly. A strong case can be made that these companies have a fiduciary responsibility to their shareholders to do exactly what they’re doing.

The interesting thing is that all these companies a big supporters of the Democrat party. So much for the Republicans being the tools of big business.


#12

I would likely be doing the same thing if I were them. In fact, I take advantage of every tax loophole that I can, even those that I think are silly.

The interesting thing is that all these companies a big supporters of the Democrat party. So much for the Republicans being the tools of big business.

It probably means that republicans aren’t the only tools of big business. When it comes to corporate contributions, both parties are in the pockets of big business. It is highly unlikely that either party is going to propose any meaningful tax reform.


#13

BINGO…theres the right answer!


#14

I think it’s more likely that they don’t want to pay the 39% corporate tax on the money if they decide to repatriate it. During a financial crisis, cash tends to become less valuable relative to hard assets, so hording it in anticipation of a financial crisis is a losing strategy. Now if they were holding gold or other precious metals instead of cash, you might be on to something.


#15

Historically, when the party changes in the White House, so does the tax code. If Clinton wins, it’ll essentially be a defacto endorcement of keeping tax policy essentially unchanged. If Trump wins, you can likely expect some changes to the tax code.


#16

Couldn’t we say the same about most income? I pay taxes on money I earn, then again when I spend it.


#17

How so?


#18

Sales and excise taxes.


#19

There is no national sales tax, so no, not directly. I realize some states have both sales and income taxes, but that’s outside the purview of the federal government. Though, arguably, you do pay when you buy something because ultimately it’s a company’s customers that pay all corporate taxes. When a company prices a product, taxes are part of the equation.


#20

Actually, it is not clear whether it is the customers, owners or workers who pay the corporate income tax.


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