Apple now holding more cash than USA

[apress]

Of course, there's actually a much deeper and more important connection. The huge cash hoards of Apple, Google, Microsoft and other big multinational corporations are a direct outgrowth of clever tax strategies they use to shift profits to low-tax countries and avoid US taxes. http://www.reuters.com/article/2011/07/27/us-microsoft-tax-i...

Corporate tax payments as a percentage of total tax revenues are low and historically low compared to the size of the economy. http://www.csmonitor.com/Business/Tax-VOX/2011/0209/Corporat...

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

[ctdonath]

Note that those big multinational corporations can't move money made outside the country to back home in the USA without incurring an absurd ~30% tax on top of whatever other taxes they paid whoever already. Word is Apple has been pushing for an amnesty so they _can_ bring their money home; until then, that money earned outside the US stays outside the US.

[kevin_morrill]

It's a bit strange to call it shifting when the profits were made overseas. And it's no surprise they'd keep it off shores once they've made it, since they'd have to give up 35% of it to bring the money inside the U.S.

[ristretto]

Imagine how worse this problem is for European countries, which face the same tax avoidance, and have to sustain massively more expensive public sectors.

[Alex3917]

To be fair, just about everyone reading this will probably have more cash than the USA in another week or two.

[binbasti]

At this burn rate, it's more like 3 days...

http://www.zerohedge.com/news/treasury-cash-drops-15-billion...

[ck2]

Steve Jobs only pays 15% taxes which is probably part of it.

(seriously, this is a fact http://seekingalpha.com/article/183086-steve-jobs-thrives-on... )

Take money from USA consumers, pour it into China manufacturing. They certainly aren't the only ones doing it but add them all up and you'll start to understand the problem.

[nkassis]

Waren Buffet was talking a while back about how it's ridiculous that he pays 17% taxes when his secretary pays over 30%. He's not a big fan of the current capital gain tax.

[tomjen3]

And how many millons does he pay more than you?

Stop whining about the wealthy. Steve earned his money, you have no right to them.

[nhaehnle]

A corporation holding cash means they're not investing as much as they could according to supply-side economic thinking.

This should make people reflect on the state of the economy. While it's true that some companies just like to hoard cash (e.g. Microsoft), this may just be the symptom of a bigger problem. With consumers low on cash due to the recession, it simply makes no sense to invest any more. This in turn guarantees that consumers will stay low on cash because a lot of slack remains in the job market.

[tomjen3]

Consumers can't spend money unless they are also producing (where else would they get their money?).

People generally like to consume, so the question is not how do we get them to consume more -- they want to do that already -- but how do we make it possible for them to produce more.

And while credit can be used to start producing (like you use a battery to start a car), it is not, and should not be, used in perpetuity to fund operations -- doing so isn't sustainable.

At the same time we wilify the rich, and those who are the most productive (see examples of how people treat Steve elsewhere in this thread). While there are certainly criminals among the rich (maybe even more than among the general population) this doesn't mean that we should blame all of them (you don't blame all African-Americans, even though they also have a higher crime rate).

As for paying their fair share -- they already do, they pay more tax than most people do and get a lot less from it (how much does Steve get in food stamps?).

[nkassis]

Here's why I believe the economy in the shitters : http://en.wikipedia.org/wiki/Velocity_of_money

Money needs to move and it's not right now.

[funthree]

Apple forbid they'd bring those manufacturing jobs to the US and actually pay some Californians a decent wage and help their own country.

http://harryjerry.com/tech/how-apple-products-are-made-in-fo...

http://www.google.com/publicdata/explore?ds=usunemployment&#...

[grannyg00se]

"the country has an operating cash balance of $73.7bn"

How is this so? I thought the annual budget was in deficit. Quite significantly, in fact.

And not to mention the country has a massive debt. Although I understand how that may not affect the operating cash balance.

The headline definitely seems like it could be used as a sound bite for corporate tax increase commentary.

[rauljara]

To use a terrible analogy that doesn't hold up under close scrutiny but is sufficiently accurate to answer your question: Just because you spend more than you earn using your credit card doesn't mean you don't have money in the bank. You can also use your credit card to put cash in your bank account.

The US doesn't hand people treasury bonds to pay them. It uses treasury bonds to put money in its treasury. Then it pays its operating expenses out of the treasury. If the treasure runs down to zero, it can't pay any of its expenses, but it will almost certainly never run down to zero. It gets in new revenues all the time (even without borrowing). Just not enough to meet all of its expenses.

[nhaehnle]

This number (the $73.7bn) is almost entirely meaningless. If you look at it from first principles, the US federal government does not need to maintain any accounts at all, since it is the entity that controls the monetary system. When they want to spend, they can just credit bank accounts directly; the money doesn't need to come from somewhere.

However, partly to make the payment systems run in a more unified manner, and partly for simple historical reasons, the Treasury does maintain accounts with a balance in them. Since the flows in and out of these accounts are important for maintaining the inter-bank interest rate, any movements there are closely coordinated with the open market operations of the Fed. In the end, the number in those accounts is basically whatever happens to satisfy the current monetary policy best.

To sum it up, the comparison in the article is void of meaning.

For understanding these kinds of things I found the writings of Modern Monetary Theory very interesting. See e.g. here: http://pragcap.com/resources/understanding-modern-monetary-s... There is also an entire chapter in the book "Understanding modern money" by Randall Wray devoted to the accounting contortions that the Fed and Treasury do while running the payment system.

[JacobAldridge]

The difference (in very simplistic terms) is Budget v Cash flow. Think like a business - I might need to borrow funds to cover all my costs this year, but when I make a sale that's still cash coming in.

See the graph here - http://www.slate.com/id/2299845/. "you will also see some spikes in revenue after borrowing is maxed out. This can be attributed to many things - an influx of tax revenue, profits from the Federal Reserve's holdings, and the general movement of funds and debt between accounts."

Also, if the funds you borrow are sitting in an account while you wait to pay future bills, you may have a deficit but a positive cash balance.

(Of course, it's not quite that simple. Borrowings in a business are normally a liability on a balance sheet, though the interest and repayments would affect the budget.)

[hugh3]

A compulsive gambler, already hundreds of thousands of dollars in debt, goes to a loan shark to borrow another five hundred bucks. He now has an operating cash balance of five hundred dollars, while still having a net worth of minus six figures.

[entangld]

How do giant stacks of uninvested cash in corporate coffers improve the economy? I wish someone could explain this.

[thematt]

Those "corporate coffers" you refer to are real investments. Apple is not going to settle for getting a 0% return on the cash it holds. It has to put the money somewhere. It's going to invest it in something, whether it be stocks, bonds, or a bank account of some type...all of which benefit the economy in a different way.

[thaumaturgy]

Supply-side economists, take note.

[cdonnellytx]

Unfortunately, they will take note of it as "run the government like a business", which tends to be how supply-side economists would prefer the government to be run anyway.

[rexreed]

What exactly will Apple do with this cash other than buy billion-dollar patent portfolios? Are there potential big acquisition deals in the works that make sense?

[timedoctor]

The government will get the money eventually through increased taxes or through printing more money and deflating the value of the apple "cash" pile. All the Government has to do is to print money and they can take Apple's money without Apple being able to do anything about it!

[dangrossman]

Nothing says Apple must keep the money in the form of US dollars in a bank account. If it's sitting in any kind of investment that tracks inflation, printing money won't take the money. If they choose to keep it in other currencies, printing money won't take the money.

[lawlit]

What will happen to the American if the congress does not vote on the rise ?

[tomelders]

No one can say for sure. It's a doomsday scenario that no one is really prepared for.

The only thing anyone can say with any certainty is that the next president of the USA will be a Republican, because that's what this is all about. Destroy the economy, blame the incumbent, and scoop up the next election.

[jasongullickson]

So...when's the buy-out?

[angelortega]

It's time to nationalize Apple, sell its assets and use the money to take off of the crisis.

[Wentz]

Sarcasm?

[rickdale]

If you have $1 you are holding more cash than the US.

[nivertech]

If you have $1 and don't have a mortgage or other debts

[ridruejo]

Can't wait to see what iBama will look like :)