Apple now holding more cash than USA(bbc.co.uk)
bbc.co.uk
Apple now holding more cash than USA
http://www.bbc.co.uk/news/technology-14340470
15 comments
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.
1. They get credit for all the taxes they paid in other countries. They are essentially supposed to pay the difference between the US rate and the various foreign rates.
2. If you read some of the links, you'll discover that they are minimizing the taxes they pay on US revenue -- sales made right here at your corner Apple store -- by use of clever licensing agreements with their own foreign subsidiaries. Look at the interactive graphic on the Bloomberg story about Google, for example http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
2. If you read some of the links, you'll discover that they are minimizing the taxes they pay on US revenue -- sales made right here at your corner Apple store -- by use of clever licensing agreements with their own foreign subsidiaries. Look at the interactive graphic on the Bloomberg story about Google, for example http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
Again, this is not because of ordinary sales outside of the US. This is a purposeful effort to reduce the amount owed in US taxes on activity in the US (and other "high" tax countries).
here's another good explanation
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
Last time we had an amnesty, all the money that flooded back in to the USA wasn't reinvested the companies or used to grow the economy, it just want straight into bonuses and dividends.
I'm not sure I follow. Distributing profits to employees (bonuses) or to investors (dividends) is bad? The employees and investors now have more money to buy things or to re-invest.
I'm not an economist, but I think that when money flows from A to B, the economy does grow. It doesn't matter if that flow is to employees as bonuses, investors as dividends, or to vendors as business expesnses.
I'm not an economist, but I think that when money flows from A to B, the economy does grow. It doesn't matter if that flow is to employees as bonuses, investors as dividends, or to vendors as business expesnses.
> I'm not an economist, but I think that when money flows from A to B, the economy does grow.
Money moving from one place to another does not always help the economy. When money flows from the corporate coffers directly into the private accounts of its executives, generally little of that money actually flows into the greater economy. When you consider that under normal circumstances 30% of that money would flow into the federal government to fund programs, it's pretty clear that less money flows into the economy in cases of tax amnesty.
Money moving from one place to another does not always help the economy. When money flows from the corporate coffers directly into the private accounts of its executives, generally little of that money actually flows into the greater economy. When you consider that under normal circumstances 30% of that money would flow into the federal government to fund programs, it's pretty clear that less money flows into the economy in cases of tax amnesty.
"private accounts of executives" is an interesting phrase when you cold have said "checking accounts of employees". It conjures up the image of Scrooge McDuck sitting on a pile of gold.
But that money is in the economy. If these "Executives" put it into stocks, then it funds company growth. If they put it into municipal bonds then it funds cities. If they put it into a checking account, then it funds home loans. IF they were to turn it into cash and put it under their mattress-- then it still funds government spending (via inflation.)
The only possible way I can think of to take that money out of the economy-- and granted this is even if your assertion that "all the money" goes to these fat cat "executives" were true, and I'm not buying it--- the only way they can take the money out of the economy would be to buy actual physical gold bullion coins and put it in a basement.
So, if these guys really were like Scrooge McDuck and literally had a basement full of gold coins then it would be out of the economy. But that is pretty much nobody.
But that money is in the economy. If these "Executives" put it into stocks, then it funds company growth. If they put it into municipal bonds then it funds cities. If they put it into a checking account, then it funds home loans. IF they were to turn it into cash and put it under their mattress-- then it still funds government spending (via inflation.)
The only possible way I can think of to take that money out of the economy-- and granted this is even if your assertion that "all the money" goes to these fat cat "executives" were true, and I'm not buying it--- the only way they can take the money out of the economy would be to buy actual physical gold bullion coins and put it in a basement.
So, if these guys really were like Scrooge McDuck and literally had a basement full of gold coins then it would be out of the economy. But that is pretty much nobody.
You're ignoring the part where we were discussing a tax holiday. When executives hoard money overseas for a decade and then bring it back tax-free, they are basically depriving the government of the tax revenue that money transfer should have brought in.
Beyond that, there's not a lot of evidence for the notion that execs making more money is a net gain for the economy. It seems intuitive that more money in the hands of the wealthy would result in more investments and growth, but to the best of my knowledge there's not much evidence for that.
The real question is not whether handing the wealthy extra money is bad, but whether it's as good as doing something else. Sure, giving a wealthy man another million might get him investing more. Giving that million to the economy at large might do more, though. After all, those same investments you say the wealthy will make could be made by average joes.
Beyond that, there's not a lot of evidence for the notion that execs making more money is a net gain for the economy. It seems intuitive that more money in the hands of the wealthy would result in more investments and growth, but to the best of my knowledge there's not much evidence for that.
The real question is not whether handing the wealthy extra money is bad, but whether it's as good as doing something else. Sure, giving a wealthy man another million might get him investing more. Giving that million to the economy at large might do more, though. After all, those same investments you say the wealthy will make could be made by average joes.
depriving the government of the tax revenue that money transfer should have brought in.
I'm not sure about the "should have" part here. That money was earned in another country. It has already had tax paid on it, in another country.
It's silly for the US to try to double-tax companies, it just puts US-based companies at a competitive disadvantage against local companies when competing for foreign business. For instance, suppose US Sprocket International sells a million sprockets at a $10 profit each, in Germany. Meanwhile, Deutsche Sprocket Gmbh is also selling a million sprockets at $10 profit each in Germany. Both US Sprocket and Deutsche Sprocket have to pay, say, $3 million in taxes to the German government for doing business in their country, and that's fine. But while Deutsche Sprocket is done with their tax obligations, US Sprocket then goes and finds that the US Government also wants a cut out of their profit. This makes doing business in Germany significantly less worthwhile for US-based companies.
Besides, let's not forget that company profits are already double taxed anyway. Tax is paid when the company makes a profit, and then again when by the shareholders when they receive their dividends. So we're really talking triple taxation here.
I'm not sure about the "should have" part here. That money was earned in another country. It has already had tax paid on it, in another country.
It's silly for the US to try to double-tax companies, it just puts US-based companies at a competitive disadvantage against local companies when competing for foreign business. For instance, suppose US Sprocket International sells a million sprockets at a $10 profit each, in Germany. Meanwhile, Deutsche Sprocket Gmbh is also selling a million sprockets at $10 profit each in Germany. Both US Sprocket and Deutsche Sprocket have to pay, say, $3 million in taxes to the German government for doing business in their country, and that's fine. But while Deutsche Sprocket is done with their tax obligations, US Sprocket then goes and finds that the US Government also wants a cut out of their profit. This makes doing business in Germany significantly less worthwhile for US-based companies.
Besides, let's not forget that company profits are already double taxed anyway. Tax is paid when the company makes a profit, and then again when by the shareholders when they receive their dividends. So we're really talking triple taxation here.
I don't think you really understand how the offshored profits work. It's not just that money isn't brought back from overseas, but that money made in the US can be sent overseas. You create a wholly-owned overseas company that gets paid to do some kind of work for you. Then you way overpay them for that work. As a wholly-owned subsidiary, all the extra money they hold is actually owned by you, but you don't pay taxes on any money you send them because you call it an operating expense. So you effectively send a bunch of money overseas untaxed. Your German division does the same thing, and now all your money is sitting in the Cayman Islands waiting for a tax holiday so you can bring it home.
Your German company scenario is incorrect as well. Firstly, because they don't have to make any significant profit in Germany. US Sprocket GmbH could buy the sprockets from US Sprocket Inc at nearly the same price they sell them for, transferring the money to the US corp while paying almost no taxes in Germany (high revenue with equally high costs means no profit). Secondly, Deutsche Sprocket GmbH is dealing with the same "double taxation" in the US, so it's not an economic disadvantage.
Your German company scenario is incorrect as well. Firstly, because they don't have to make any significant profit in Germany. US Sprocket GmbH could buy the sprockets from US Sprocket Inc at nearly the same price they sell them for, transferring the money to the US corp while paying almost no taxes in Germany (high revenue with equally high costs means no profit). Secondly, Deutsche Sprocket GmbH is dealing with the same "double taxation" in the US, so it's not an economic disadvantage.
That's not true. Companies aren't free to set transfer prices. The IRS has many rules on how much a company can charge a foreign unit for a product (and vice verse). That method of tax avoidance was closed a long time ago.
It was not closed, it was reduced. Companies are still doing it. They wouldn't continue if it wasn't beneficial to do so.
US regulations also don't do anything to transfer prices in other countries. Google apparently pays something like 2.4% tax on their foreign profits because they funnel them all to the Bahamas.
US regulations also don't do anything to transfer prices in other countries. Google apparently pays something like 2.4% tax on their foreign profits because they funnel them all to the Bahamas.
I won't argue that companies are still trying to reduce taxes through transfer prices. However, any company that tries to avoid US taxes through transfer price schemes is not going to get very far. I have no doubt that Google is funneling a lot of revenue through the Bahamas, but they must have setup the off-shore corporation in such a way as to fall outside the jurisdiction of the IRS. To say that they are only paying 2.4% on "foreign profits" means nothing. If that's what they are supposed to pay, then nothing is wrong right? Google is an international corporation.
I think the policy dilemma is that you are both right to some degree. If it wasn't such an ideologically charged issue, the solution would be quite simple. Tax repatriated profits but reduce the amount payable by the taxes paid overseas. Or enter into a double taxation agreement with the countries involved.
Companies already get to reduce their US tax by the amount of tax they paid a foreign government. The issue here is that that they've moved the profits to places where little or no taxes are paid at all. This is not about double taxation.
I think it would be reasonable to reduce the tax by the amount of foreign tax paid, but I don't think it would fix the problem. Most of the money in offshore havens was barely taxed. So instead of 35%, Apple can pay maybe 30% bringing it home. That's not enough of a drop to motivate them. It would probably open some more loopholes, too, but I can't be sure about that.
The real issue is that some countries want to allow this stuff. They want these shell companies because it brings them some revenue they wouldn't otherwise have. And who can blame them, really. So as long as we have international companies, we'll have tax havens. I'm not sure if there really is a fix.
The real issue is that some countries want to allow this stuff. They want these shell companies because it brings them some revenue they wouldn't otherwise have. And who can blame them, really. So as long as we have international companies, we'll have tax havens. I'm not sure if there really is a fix.
If you distribute a million dollars across the entire US economy, that's roughly 30 cents per person, and it's likely to be spent on some chewing gum or a very small amount of food. It dissipates before it has a chance to grow. If concentrated, the million dollars can be applied to things that are only possible when money is concentrated, like doing research and development, investing in large construction projects, etc. Instead of spending the money directly on basic resource acquisition, when concentrated, it can amplify resource production, which lowers prices and provides a greater benefit to the average Joe than having another 30 cents in his wallet.
Money doesn't "dissipate" because it's spent. Money changing hands is what fuels the economy.
There's also no reason to assume that tax money goes from wealthy pockets to poor ones directly. The government can build infrastructure (which they do a lot more of than private industry), fund R&D, etc. Individuals could also invest their money into funds that fuel R&D, fund startups, etc. It's incorrect to claim that only the wealthy invest.
There's also no reason to assume that tax money goes from wealthy pockets to poor ones directly. The government can build infrastructure (which they do a lot more of than private industry), fund R&D, etc. Individuals could also invest their money into funds that fuel R&D, fund startups, etc. It's incorrect to claim that only the wealthy invest.
"There's also no reason to assume that tax money goes from wealthy pockets to poor ones directly. The government can build infrastructure (which they do a lot more of than private industry), fund R&D, etc. Individuals could also invest their money into funds that fuel R&D, fund startups, etc. It's incorrect to claim that only the wealthy invest."
And there are some project that only the government can take on due to how long cost recoup would be or the risk levels (Space, Internet...) but those things fund high paying jobs.
And there are some project that only the government can take on due to how long cost recoup would be or the risk levels (Space, Internet...) but those things fund high paying jobs.
You make the assumption that tax money goes into the population's pockets instead of government-funded projects.
Your argument is easily reversible to raise taxes across the board in order to concentrate the money into government projects rather than having it spread around.
Your argument is easily reversible to raise taxes across the board in order to concentrate the money into government projects rather than having it spread around.
That's not entirely true. The effect you describe depends on loan growth. Money sitting in bank accounts isn't automatically funding anything. There has to be demand for loans and the banks have to be willing to lend, otherwise nothing happens.
In other words, there's a difference between capital being available and capital being put to use. Velocity of money is important.
Also, if I buy Apple stock today, Apple doesn't see a cent of it. Whether or not that money goes on to fund anything at all depends on what the person who sold me the stock does with the money.
In other words, there's a difference between capital being available and capital being put to use. Velocity of money is important.
Also, if I buy Apple stock today, Apple doesn't see a cent of it. Whether or not that money goes on to fund anything at all depends on what the person who sold me the stock does with the money.
But you did provide a little up-pressure on the stock price.
Sure, but that in itself does not make the economy grow. It could potentially make the economy grow if the person I buy the stock from uses it to buy other shares in an IPO and that company spends the money to fund actual work. Or if that person just puts the money into consumption.
I'm just saying that boosting some share price does not in itself fund any labor. That's important, because the difficulty of getting the economy growing again after a balance sheet recession like the one we just saw, is to get money moving, not just sitting somwhere with a nominal price tag on it.
I'm just saying that boosting some share price does not in itself fund any labor. That's important, because the difficulty of getting the economy growing again after a balance sheet recession like the one we just saw, is to get money moving, not just sitting somwhere with a nominal price tag on it.
> Money moving from one place to another does not always help the economy. When money flows from the corporate coffers directly into the private accounts of its executives, generally little of that money actually flows into the greater economy.
Can you give an example of how this would hurt the economy?
EDIT - those that down voted, mind giving a reason?
Can you give an example of how this would hurt the economy?
EDIT - those that down voted, mind giving a reason?
First, "not help" is not a synonym for "hurt".
Second, if we assume that a dollar in one place does not always provide the same value to the economy as a dollar in another place (which everyone seems to agree on; they just don't agree on which places provide the most value), then we must conclude that over the long term sending as much money as possible to a sub-optimal place is worse for the economy than sending it somewhere more optimal.
Second, if we assume that a dollar in one place does not always provide the same value to the economy as a dollar in another place (which everyone seems to agree on; they just don't agree on which places provide the most value), then we must conclude that over the long term sending as much money as possible to a sub-optimal place is worse for the economy than sending it somewhere more optimal.
But what is optimal?
I think it's pretty obvious that taking money away from the rich giving it to the poor, maybe even in the form of food stamps, has a very direct and immediate effect on GDP. So it is clearly optimal in the short run in terms of GDP and also for helping those who really need it in times like these.
But in the longer run, some of the money needs to go into investment or society will stagnate. Some of that investment can be done by governments, but central planning isn't very good at exploring new ideas. Transparent, democratic governments can be pretty efficient in doing things that are already well known and institutionalized. For instance, European health care systems are hugely more efficient than the US one.
On the other hand, the Googles and Apples of this world are difficult to imagine as creatures of some government.
I think it's pretty obvious that taking money away from the rich giving it to the poor, maybe even in the form of food stamps, has a very direct and immediate effect on GDP. So it is clearly optimal in the short run in terms of GDP and also for helping those who really need it in times like these.
But in the longer run, some of the money needs to go into investment or society will stagnate. Some of that investment can be done by governments, but central planning isn't very good at exploring new ideas. Transparent, democratic governments can be pretty efficient in doing things that are already well known and institutionalized. For instance, European health care systems are hugely more efficient than the US one.
On the other hand, the Googles and Apples of this world are difficult to imagine as creatures of some government.
I don't know what optimal is, but the evidence is that giving more to the wealthy doesn't help much. My family is decidedly upper-upper-middle class, and I won't pretend that cutting my taxes will stimulate the economy. Extra money is going into loan repayment or savings. If my taxes went away entirely, I'd spend more, but not enough to offset the loss of revenue to the government.
I fully agree that there must be private investments, and indeed there must be wealthy people. Whenever I hear someone say "No one needs more than X dollars", I immediately know that I'm talking to an extremely naive person. However, I do think that the pendulum has swung too far in favor of the wealthy, not just in terms of taxes.
Edit: Just to be clear, dumping money into the pockets of average Joes isn't necessarily going to do anything to stimulate the economy either. The tax rebates showed that.
I fully agree that there must be private investments, and indeed there must be wealthy people. Whenever I hear someone say "No one needs more than X dollars", I immediately know that I'm talking to an extremely naive person. However, I do think that the pendulum has swung too far in favor of the wealthy, not just in terms of taxes.
Edit: Just to be clear, dumping money into the pockets of average Joes isn't necessarily going to do anything to stimulate the economy either. The tax rebates showed that.
You down voted my question but still did not provide a concrete example.
I didn't downvote your question. I don't believe HN lets you downvote someone who replies to you, and I don't have the karma to downvote anyway.
I don't think you would accept a concrete answer. Do you believe that every dollar in every place (federal tax revenue, corp coffers, billionaire's money market account, average joe's mortgage, food stamp, etc.) has the same value to the economy? If not, then you must agree that some of these are better places to send a dollar than others. Whether choosing a suboptimal flow "hurts" the economy is semantics.
If you think that putting another dollar in a wealthy man's account is the best use of the dollar, then I would say that history disagrees with you, as there's little evidence that "trickle down" economics work. Something like 80% of economists say it doesn't work.
I don't think you would accept a concrete answer. Do you believe that every dollar in every place (federal tax revenue, corp coffers, billionaire's money market account, average joe's mortgage, food stamp, etc.) has the same value to the economy? If not, then you must agree that some of these are better places to send a dollar than others. Whether choosing a suboptimal flow "hurts" the economy is semantics.
If you think that putting another dollar in a wealthy man's account is the best use of the dollar, then I would say that history disagrees with you, as there's little evidence that "trickle down" economics work. Something like 80% of economists say it doesn't work.
You're wrong.
As long as those money are flowing, it helps the economy. The only instance where it wouldn't is if it disappeared from the market.
This is even more obvious in Europe where a large chunk of all taxes payed comes from VAT; which are like sales taxes in the U.S. except everybody pays them.
As long as those money are flowing, it helps the economy. The only instance where it wouldn't is if it disappeared from the market.
This is even more obvious in Europe where a large chunk of all taxes payed comes from VAT; which are like sales taxes in the U.S. except everybody pays them.
> As long as those money are flowing, it helps the economy. The only instance where it wouldn't is if it disappeared from the market.
This is naive. In what sense does it help the economy if I take $1000 from my account and give it to my friend who puts it into his account? There's no extra money in circulation, no projects funded, no growth, nothing. Money moved and it did nothing.
> This is even more obvious in Europe where a large chunk of all taxes payed comes from VAT; which are like sales taxes in the U.S. except everybody pays them.
I'm not clear how that proves that money flowing always helps the economy. What the VAT indicates is that the EU believes in taxing at all points along the chain of production.
This is naive. In what sense does it help the economy if I take $1000 from my account and give it to my friend who puts it into his account? There's no extra money in circulation, no projects funded, no growth, nothing. Money moved and it did nothing.
> This is even more obvious in Europe where a large chunk of all taxes payed comes from VAT; which are like sales taxes in the U.S. except everybody pays them.
I'm not clear how that proves that money flowing always helps the economy. What the VAT indicates is that the EU believes in taxing at all points along the chain of production.
if I take $1000 from my account and give it to my
friend who puts it into his account?
As soon as your friend spends it, in my country 240 USD will go to VAT. Out of the remaining sum, the company receiving the payment may have to pay salaries. Not even Google can get away with not paying taxes on salaries and taxes on salaries are somewhere north of 40%.
So lets say something like 450 USD (out of that 1000 USD) will end up in the pocket of some employee. Then that employee spends it on something -- another 100 USD will go to VAT, and ~ 340 USD going to the company receiving the payment. Some part of that 340 USD will go to salaries, which are taxed and then employees are buying stuff, so they get taxed again.
Companies also pay taxes on investments or sunken costs, not only salaries. So if Apple brings home some of those billions, but acquires some U.S. company, than a lot of money will still go as taxes.
It really goes round and round.
Also, here's an anecdote -- I live in Romania. We are not like Greece, we are not currently in danger of defaulting. Do you know the main reason for that? It's not because we pay our taxes -- in fact, I think we do more tax evasion than Greece is.
The reason has to do with money getting in. We've got more than 4 million people with foreign jobs and residences that are sending money home to their families. Those money are not getting taxed, but it has been enough for our economy to not completely go downhill, and I know this little fact from good sources.
You've changed the scenario. You're now talking about spending the money, which is wholly different from the scenario I described. In my scenario, money flowed but did not help the economy. In your scenario, you're assuming the $1000 was spent and then following the trail of its expenditure. But if the money is never spent, none of that revenue will ever get to the government.
I also think you might be wrong about the legality of a tax-free wealth transfer. According to this site, Romania has no gift tax.
http://www.cfe-eutax.org/taxation/gift-tax/romania
And if we are extending the metaphor to wealthy individuals and corporations, they have plenty of people on staff to help avoid or minimize taxes. Ironically, I also read that Banks are specifically excluded from the VAT in Romania.
> Companies also pay taxes on investments or sunken costs, not only salaries. So if Apple brings home some of those billions, but acquires some U.S. company, than a lot of money will still go as taxes.
I'm pretty sure that's not the case. If Apple brings home those billions, they'll pay whatever taxes are owed for that profit. They won't pay extra if they then use the remaining money to buy up another company.
As for why Romania is doing better than Greece, I think it has a lot to do with the fact that Greece's debt is about 144% of its GDP while Romania's is about 34%.
https://www.cia.gov/library/publications/the-world-factbook/...
Romania's revenue/expense ratio is also better than Greece's. There are probably a lot of reasons why Romania is doing better than Greece. It's not just because Romanians send money home to their families.
I also think you might be wrong about the legality of a tax-free wealth transfer. According to this site, Romania has no gift tax.
http://www.cfe-eutax.org/taxation/gift-tax/romania
And if we are extending the metaphor to wealthy individuals and corporations, they have plenty of people on staff to help avoid or minimize taxes. Ironically, I also read that Banks are specifically excluded from the VAT in Romania.
> Companies also pay taxes on investments or sunken costs, not only salaries. So if Apple brings home some of those billions, but acquires some U.S. company, than a lot of money will still go as taxes.
I'm pretty sure that's not the case. If Apple brings home those billions, they'll pay whatever taxes are owed for that profit. They won't pay extra if they then use the remaining money to buy up another company.
As for why Romania is doing better than Greece, I think it has a lot to do with the fact that Greece's debt is about 144% of its GDP while Romania's is about 34%.
https://www.cia.gov/library/publications/the-world-factbook/...
Romania's revenue/expense ratio is also better than Greece's. There are probably a lot of reasons why Romania is doing better than Greece. It's not just because Romanians send money home to their families.
According to this site, Romania has no gift tax.
Money going to the government to "fund programs" doesn't go into the economy either. There's a possibility it will go to salaries and things, but that's hardly a guarantee. The government doesn't create the economy, private sector growth does. When money goes to "private accounts of executives", and those accounts are in banks and investment funds, that money is going to be used to capitalize new growth (unless they're hoarding that money in Swiss accounts somewhere).
> Money going to the government to "fund programs" doesn't go into the economy either.
It most certainly does. The government doesn't hold any significant amount of money in reserve. Every dollar they receive (and a lot they don't) gets invested in the economy in some way (salary, materials purchases, R&D, etc.)
> When money goes to "private accounts of executives", and those accounts are in banks and investment funds, that money is going to be used to capitalize new growth (unless they're hoarding that money in Swiss accounts somewhere).
This is a lovely dream with little evidence to support it. The idea that rich people getting richer helps the economy is not founded on fact. There's been a tax holiday before. It didn't grow the economy. Tax cuts for the wealthy did not grow the economy. Even if wealthy people invest more when they get wealthier, the real issue is whether that is more valuable to the economy than more dollars flowing through the hands of most people, more dollars flowing into infrastructure investments, etc.
It most certainly does. The government doesn't hold any significant amount of money in reserve. Every dollar they receive (and a lot they don't) gets invested in the economy in some way (salary, materials purchases, R&D, etc.)
> When money goes to "private accounts of executives", and those accounts are in banks and investment funds, that money is going to be used to capitalize new growth (unless they're hoarding that money in Swiss accounts somewhere).
This is a lovely dream with little evidence to support it. The idea that rich people getting richer helps the economy is not founded on fact. There's been a tax holiday before. It didn't grow the economy. Tax cuts for the wealthy did not grow the economy. Even if wealthy people invest more when they get wealthier, the real issue is whether that is more valuable to the economy than more dollars flowing through the hands of most people, more dollars flowing into infrastructure investments, etc.
"Every dollar they receive (and a lot they don't) gets invested in the economy in some way (salary, materials purchases, R&D, etc.)"
Two problems with that statement. First, you're only looking at one side of the equation. You're ignoring the cost and damage to the economy that government spending does. I don't just mean by crowding out other, more efficient solutions, but the literal taxation and inflation that government uses to get the money in the first place inhibits economic growth. Both actions reduce the "bottom line" for consumers and companies and thus reduce the funds they have available when deciding to make capital purchases- whether it is a house or a car or sending kids to college or building a plant to create more jobs. All of the money government takes prevents those things from happening.
The second is that you're ignoring that much of that "investment" is actually spent on activities that are themselves net-harmful to the economy. Such as the overzealous regulators that shut businesses down, the agencies that spend their time inhibiting efficient running of businesses, or even make it impossible to operate your plant safely because government regulations don't allow the use of the latest safety equipment (only what was on the market at the time the regulation was created) or FDA examiners that drive costs thru the roof, and prevent access to drugs for dying people because the drugs are "experimental" and might kill them in 20 years (though their disease will get them a lot sooner) etc. Much of the money government spends is on programs that make people less safe and more on topic, undermine economic growth with no real benefit other than providing good political jobs to hand out.
"This is a lovely dream with little evidence to support it."
The entire history of the USA supports it.
"The idea that rich people getting richer helps the economy is not founded on fact."
The error you're making here is that you think that letting people keep their money only helps the rich. IF you take all of the incomes of the bottom %50 of the populace and you compare it to the incomes of the tope %50 of the populace, there are a lot more people in the lower half and they make a lot more money. Not squandering that money benefits them a whole lot more than it does the rich.
Frankly, the economics are not really up for debate. They don't support your side. The slogans about "rich people getting rich" are just rationalizations for theft.
That theft, actually, hurts poor people more than it does rich people. Rich people are insulated, the poor are not.
Bush's original Tax cut proposed reducing taxes for poor people by %50, IIRC, and the reduction for the richest was around %2. After the democrats managed to "compromise" it, what got passed reduced taxes for the poorest by %20. Why weren't the democrats in favor of the large tax cut for the poor?
And even still, even though every way you measure it-- dollar terms or percentage terms-- these tax cuts helped the poor more than the rich, ever since they've been passed, democrats have been calling them "tax cuts for the rich".
Frankly, from an economics perspective, lower regulation, lower taxes, lower inflation, no matter how unevenly applied, helps the poor. It always does, it always will, and in fact it has to-- the primary way you get rich is by improving the lives of the poor.
I don't understand why democrats constantly support policies that hurt the poor, are constantly trying to raise their taxes (While always, of course, claiming to only want to tax the rich) but they do.
I'm not a republican, so, put down that assumption I've just studied economics. What the politicians tell you about economics is designed to serve their interests, not yours.
Two problems with that statement. First, you're only looking at one side of the equation. You're ignoring the cost and damage to the economy that government spending does. I don't just mean by crowding out other, more efficient solutions, but the literal taxation and inflation that government uses to get the money in the first place inhibits economic growth. Both actions reduce the "bottom line" for consumers and companies and thus reduce the funds they have available when deciding to make capital purchases- whether it is a house or a car or sending kids to college or building a plant to create more jobs. All of the money government takes prevents those things from happening.
The second is that you're ignoring that much of that "investment" is actually spent on activities that are themselves net-harmful to the economy. Such as the overzealous regulators that shut businesses down, the agencies that spend their time inhibiting efficient running of businesses, or even make it impossible to operate your plant safely because government regulations don't allow the use of the latest safety equipment (only what was on the market at the time the regulation was created) or FDA examiners that drive costs thru the roof, and prevent access to drugs for dying people because the drugs are "experimental" and might kill them in 20 years (though their disease will get them a lot sooner) etc. Much of the money government spends is on programs that make people less safe and more on topic, undermine economic growth with no real benefit other than providing good political jobs to hand out.
"This is a lovely dream with little evidence to support it."
The entire history of the USA supports it.
"The idea that rich people getting richer helps the economy is not founded on fact."
The error you're making here is that you think that letting people keep their money only helps the rich. IF you take all of the incomes of the bottom %50 of the populace and you compare it to the incomes of the tope %50 of the populace, there are a lot more people in the lower half and they make a lot more money. Not squandering that money benefits them a whole lot more than it does the rich.
Frankly, the economics are not really up for debate. They don't support your side. The slogans about "rich people getting rich" are just rationalizations for theft.
That theft, actually, hurts poor people more than it does rich people. Rich people are insulated, the poor are not.
Bush's original Tax cut proposed reducing taxes for poor people by %50, IIRC, and the reduction for the richest was around %2. After the democrats managed to "compromise" it, what got passed reduced taxes for the poorest by %20. Why weren't the democrats in favor of the large tax cut for the poor?
And even still, even though every way you measure it-- dollar terms or percentage terms-- these tax cuts helped the poor more than the rich, ever since they've been passed, democrats have been calling them "tax cuts for the rich".
Frankly, from an economics perspective, lower regulation, lower taxes, lower inflation, no matter how unevenly applied, helps the poor. It always does, it always will, and in fact it has to-- the primary way you get rich is by improving the lives of the poor.
I don't understand why democrats constantly support policies that hurt the poor, are constantly trying to raise their taxes (While always, of course, claiming to only want to tax the rich) but they do.
I'm not a republican, so, put down that assumption I've just studied economics. What the politicians tell you about economics is designed to serve their interests, not yours.
> Two problems with that statement. First, you're only looking at one side of the equation. You're ignoring the cost and damage to the economy that government spending does. I don't just mean by crowding out other, more efficient solutions, but the literal taxation and inflation that government uses to get the money in the first place inhibits economic growth. Both actions reduce the "bottom line" for consumers and companies and thus reduce the funds they have available when deciding to make capital purchases- whether it is a house or a car or sending kids to college or building a plant to create more jobs. All of the money government takes prevents those things from happening.
This is ignoring the fact that government spending results in a ton of net-positives. The government might tax your bottom line, making it harder for you to buy a Lexus (and send an extra $10K overseas), but those taxes build roads, provide social security and medicare, fund our military, etc.
Obviously government spending must ultimately come from the pocketbooks of the people, but the fact is that government spending is a necessity. Giving 100% of everyone's money to the government would be a very bad thing, but giving no money to the government would be at least as bad. So somewhere in the middle is an appropriate amount of taxation. Claiming that taxation and inflation "inhibits economic growth" as a blanket fact is patently untrue.
> The second is that you're ignoring that much of that "investment" is actually spent on activities that are themselves net-harmful to the economy. Such as the overzealous regulators that shut businesses down, the agencies that spend their time inhibiting efficient running of businesses, or even make it impossible to operate your plant safely because government regulations don't allow the use of the latest safety equipment (only what was on the market at the time the regulation was created) or FDA examiners that drive costs thru the roof, and prevent access to drugs for dying people because the drugs are "experimental" and might kill them in 20 years (though their disease will get them a lot sooner) etc. Much of the money government spends is on programs that make people less safe and more on topic, undermine economic growth with no real benefit other than providing good political jobs to hand out.
So if we get rid of regulations the economy will improve? Some regulations are obviously a net negative, but most of our regulations were put in place to address known problems. Why would deregulating drugs help us? Clearly the drug companies are making plenty of money, and yet they are the ones arguing in favor of deregulation. If they are in favor of deregulation, surely they expect to make more money in the absence of regulation. Do you think that implies a drop in costs? Perhaps it implies a decrease in safety testing instead? We did a lot of deregulating banks, and that worked out really well. Please tell me why you think businesses would bother to be safer if OSHA was eliminated. There was a time when we didn't regulate workplace safety. We enacted laws specifically because in the absence of regulation, workplaces are less safe. When workplace safety is not required, more people die. When fire codes are not required, building burn down more often. The libertarian ideal ignores the fact that regulations were largely enacted to fix very real problems.
> The entire history of the USA supports it.
It most certainly does not. The wealth gap at its present is far larger than it historically has been in the US. Yet we don't see a sailing economy. On the other hand, after WWII taxes were obscene, yet the economy boomed.
> The error you're making here is that you think that letting people keep their money only helps the rich. IF you take all of the incomes of the bottom %50 of the populace and you compare it to the incomes of the tope %50 of the populace, there are a lot more people in the lower half and they make a lot more money. Not squandering that money benefits them a whole lot more than it does the rich.
This doesn't even make sense. There are not more people in the bottom 50% than in the top 50%. There are equal amounts in both halves. And the bottom half certainly doesn't make more money. That's why it's the bottom half.
> Frankly, the economics are not really up for debate. They don't support your side. The slogans about "rich people getting rich" are just rationalizations for theft.
Strangely, something like 80% of economists disagree with you.
> That theft, actually, hurts poor people more than it does rich people. Rich people are insulated, the poor are not.
Not at all true. Poor people pay no or nearly no tax. Middle-class people pay less tax. With respect to corporate tax holidays, not a lot of poor or middle class people see any income from that.
> Bush's original Tax cut proposed reducing taxes for poor people by %50, IIRC, and the reduction for the richest was around %2. After the democrats managed to "compromise" it, what got passed reduced taxes for the poorest by %20. Why weren't the democrats in favor of the large tax cut for the poor?
Probably because the poor don't actually pay any significant federal income tax. Many of them actually get tax credits.
Also because your information is incorrect. Bush's tax cuts brought the top tax bracket down by about 5%.
> And even still, even though every way you measure it-- dollar terms or percentage terms-- these tax cuts helped the poor more than the rich, ever since they've been passed, democrats have been calling them "tax cuts for the rich".
The tax cuts were moronic regardless of who they helped the most.
> Frankly, from an economics perspective, lower regulation, lower taxes, lower inflation, no matter how unevenly applied, helps the poor. It always does, it always will, and in fact it has to-- the primary way you get rich is by improving the lives of the poor.
This is delusional. You don't get rich by improving the lives of the poor. You get rich by getting a lot of money. You can do that by starting a profitable company, inheriting a lot of money, trafficking drugs, stealing money from others, and any number of other ways. Some ways that you could get rich will help the poor. Other ways will not.
> I don't understand why democrats constantly support policies that hurt the poor, are constantly trying to raise their taxes (While always, of course, claiming to only want to tax the rich) but they do. I'm not a republican, so, put down that assumption I've just studied economics. What the politicians tell you about economics is designed to serve their interests, not yours.
I don't understand how anyone, Republican or otherwise, can look at what's happened in our country over the past decade and come to the conclusion that deregulation and lower taxes are beneficial. Look at the unemployment rate. Look at the federal deficit and debt. Exactly how have Bush's tax cuts helped most people?
This is ignoring the fact that government spending results in a ton of net-positives. The government might tax your bottom line, making it harder for you to buy a Lexus (and send an extra $10K overseas), but those taxes build roads, provide social security and medicare, fund our military, etc.
Obviously government spending must ultimately come from the pocketbooks of the people, but the fact is that government spending is a necessity. Giving 100% of everyone's money to the government would be a very bad thing, but giving no money to the government would be at least as bad. So somewhere in the middle is an appropriate amount of taxation. Claiming that taxation and inflation "inhibits economic growth" as a blanket fact is patently untrue.
> The second is that you're ignoring that much of that "investment" is actually spent on activities that are themselves net-harmful to the economy. Such as the overzealous regulators that shut businesses down, the agencies that spend their time inhibiting efficient running of businesses, or even make it impossible to operate your plant safely because government regulations don't allow the use of the latest safety equipment (only what was on the market at the time the regulation was created) or FDA examiners that drive costs thru the roof, and prevent access to drugs for dying people because the drugs are "experimental" and might kill them in 20 years (though their disease will get them a lot sooner) etc. Much of the money government spends is on programs that make people less safe and more on topic, undermine economic growth with no real benefit other than providing good political jobs to hand out.
So if we get rid of regulations the economy will improve? Some regulations are obviously a net negative, but most of our regulations were put in place to address known problems. Why would deregulating drugs help us? Clearly the drug companies are making plenty of money, and yet they are the ones arguing in favor of deregulation. If they are in favor of deregulation, surely they expect to make more money in the absence of regulation. Do you think that implies a drop in costs? Perhaps it implies a decrease in safety testing instead? We did a lot of deregulating banks, and that worked out really well. Please tell me why you think businesses would bother to be safer if OSHA was eliminated. There was a time when we didn't regulate workplace safety. We enacted laws specifically because in the absence of regulation, workplaces are less safe. When workplace safety is not required, more people die. When fire codes are not required, building burn down more often. The libertarian ideal ignores the fact that regulations were largely enacted to fix very real problems.
> The entire history of the USA supports it.
It most certainly does not. The wealth gap at its present is far larger than it historically has been in the US. Yet we don't see a sailing economy. On the other hand, after WWII taxes were obscene, yet the economy boomed.
> The error you're making here is that you think that letting people keep their money only helps the rich. IF you take all of the incomes of the bottom %50 of the populace and you compare it to the incomes of the tope %50 of the populace, there are a lot more people in the lower half and they make a lot more money. Not squandering that money benefits them a whole lot more than it does the rich.
This doesn't even make sense. There are not more people in the bottom 50% than in the top 50%. There are equal amounts in both halves. And the bottom half certainly doesn't make more money. That's why it's the bottom half.
> Frankly, the economics are not really up for debate. They don't support your side. The slogans about "rich people getting rich" are just rationalizations for theft.
Strangely, something like 80% of economists disagree with you.
> That theft, actually, hurts poor people more than it does rich people. Rich people are insulated, the poor are not.
Not at all true. Poor people pay no or nearly no tax. Middle-class people pay less tax. With respect to corporate tax holidays, not a lot of poor or middle class people see any income from that.
> Bush's original Tax cut proposed reducing taxes for poor people by %50, IIRC, and the reduction for the richest was around %2. After the democrats managed to "compromise" it, what got passed reduced taxes for the poorest by %20. Why weren't the democrats in favor of the large tax cut for the poor?
Probably because the poor don't actually pay any significant federal income tax. Many of them actually get tax credits.
Also because your information is incorrect. Bush's tax cuts brought the top tax bracket down by about 5%.
> And even still, even though every way you measure it-- dollar terms or percentage terms-- these tax cuts helped the poor more than the rich, ever since they've been passed, democrats have been calling them "tax cuts for the rich".
The tax cuts were moronic regardless of who they helped the most.
> Frankly, from an economics perspective, lower regulation, lower taxes, lower inflation, no matter how unevenly applied, helps the poor. It always does, it always will, and in fact it has to-- the primary way you get rich is by improving the lives of the poor.
This is delusional. You don't get rich by improving the lives of the poor. You get rich by getting a lot of money. You can do that by starting a profitable company, inheriting a lot of money, trafficking drugs, stealing money from others, and any number of other ways. Some ways that you could get rich will help the poor. Other ways will not.
> I don't understand why democrats constantly support policies that hurt the poor, are constantly trying to raise their taxes (While always, of course, claiming to only want to tax the rich) but they do. I'm not a republican, so, put down that assumption I've just studied economics. What the politicians tell you about economics is designed to serve their interests, not yours.
I don't understand how anyone, Republican or otherwise, can look at what's happened in our country over the past decade and come to the conclusion that deregulation and lower taxes are beneficial. Look at the unemployment rate. Look at the federal deficit and debt. Exactly how have Bush's tax cuts helped most people?
"The more you tighten your grip, Tarkin, the more star systems will slip through your fingers."
Distributing profits via bonuses and dividends in the US without US taxes being collected on that money is bad, yes. It's not like corporations pay a very high tax rate, even on the rare occasions that they do actually pay their full tax obligation, after all.
And the other point, of course, is that money that goes directly into the savings accounts of the already-rich does not tend to stimulate the economy very well. This is a rather well-demonstrated fact: if the money doesn't get spent, there's no economic impact there.
And the other point, of course, is that money that goes directly into the savings accounts of the already-rich does not tend to stimulate the economy very well. This is a rather well-demonstrated fact: if the money doesn't get spent, there's no economic impact there.
> Distributing profits via bonuses and dividends in the US without US taxes being collected on that money is bad, yes.
Since when are bonuses and dividends not taxed?
Since when are bonuses and dividends not taxed?
There are plenty of ways to set things up so that dividends are not taxed in the US, the most obvious being stocks owned by charitable organizations or resident of another country. As to bonuses the AMT was specifically created because of people paying zero taxes despite significant income. However, you can have situations where a bonus results in minimal, zero, or even negative additional taxes for a given year. EX: Putting the full value of a bonus into a 401k while over the SS cap.
It doesn't count unless it's taxed at least three times.
GDP = Gross Domestic Product.
In order to grow GDP, you must increase the production of goods and services domestically.
Sure, more money for investors/employees is not bad. But an amnesty is no different than the government directly giving money to them. It's never bad to give employees a tax credit, but when we're in such dire straits there are more urgent uses for the money. It's never about "Is giving money to X wasteful?" but more about "Is that the best I can do?"
In order to grow GDP, you must increase the production of goods and services domestically.
Sure, more money for investors/employees is not bad. But an amnesty is no different than the government directly giving money to them. It's never bad to give employees a tax credit, but when we're in such dire straits there are more urgent uses for the money. It's never about "Is giving money to X wasteful?" but more about "Is that the best I can do?"
And those don't get income taxed at around the higher income brackets of over 30%? Wont a corporation just be able to write off bonuses as employee compensation expenses anyway?
Those bonuses and dividends are all still taxed, in some cases at a higher rate then the corporate tax?
Not just Apple is lobbying this tax holiday.
More info here http://money.cnn.com/2011/02/16/news/companies/repatriation_...
More info here http://money.cnn.com/2011/02/16/news/companies/repatriation_...
Maybe it's time they paid their fucking taxes like the rest of us.
Why should they pay tax on that money? It was generated in a foreign country by a foreign corporation and already subjected to foreign taxes.
The US didn't expend resources helping them make that money, therefore it doesn't deserve any of it. If anything, we should be encouraging them to bring it back here.
The US didn't expend resources helping them make that money, therefore it doesn't deserve any of it. If anything, we should be encouraging them to bring it back here.
That is not correct. Did you actually read any of the links above? Apple, Google, Microsoft and others shift billions of dollars a year in profits ON SALES IN THE UNITED STATES out of the US and to low tax or no tax countries using clever internal sales agreements with their own subsidiaries over intellectual property licensing. http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
I just meant in the general sense. Google needs to pay their taxes too, but tech companies aren't the only ones evading taxes and getting away with it. Specifically this tax? Maybe not. But that wasn't the point.
Apple and Google are foreign corporations?
Also, I know people who live and work in foreign countries and haven't stepped foot in the US for decades who still pay tens if not hundreds of thousands of dollars to the US each year in taxes. So yeah, it's unfair that large, American corporations are somehow exempt.
I'm as tax-phobic as any red-blooded yank, but if we are going to demand ever increasing government services and entitlements (including corporate welfare), we better be willing to pay for it.
Also, I know people who live and work in foreign countries and haven't stepped foot in the US for decades who still pay tens if not hundreds of thousands of dollars to the US each year in taxes. So yeah, it's unfair that large, American corporations are somehow exempt.
I'm as tax-phobic as any red-blooded yank, but if we are going to demand ever increasing government services and entitlements (including corporate welfare), we better be willing to pay for it.
IIRC, google pays like 4% taxes and apple like 25%.
Do you have a source on that?
http://www.advfn.com/p.php?pid=financials&symbol=NASDAQ%...
24.4% for apple
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
2.4% for google
24.4% for apple
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
2.4% for google
You're comparing Moogles and Googles here.
Why would you source Apple's effective tax rate at http://www.advfn.com/ and not point out that on the same website, Google's effective tax rate is 21.4% and not 2.4%?
Why would you source Apple's effective tax rate at http://www.advfn.com/ and not point out that on the same website, Google's effective tax rate is 21.4% and not 2.4%?
Google is 2.4%, I think.
http://news.ycombinator.com/item?id=2783382
http://news.ycombinator.com/item?id=2783382
Why, other than for fairness? I have far more confidence that Apple will spend the money in a way that benefits me than that the government will. They certainly have so far.
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.
This is not about profits made overseas, say like selling iPhones in China This is the use of complex strategies, like creating a shell company in the Isle of man that "owns" intellectual property and "licenses" it to the US subsidiary for a fee that just happens to equal most of the profits on US sales. The profits go to the tax haven and never come back.
In this instance, to my knowledge, Apple isn't using shell companies. It has iTunes set up in Luxembourg, but that's a very real company. And each country has it's own Apple subsidiary which again are real companies in their own right.
I'd say that it's hardly tax avoidance, since they pay their taxes in the countries where the revenue is generated. No one in their right mind would give up 35% of their wealth simply to move it to a different country, and nor should they.
I'd say that it's hardly tax avoidance, since they pay their taxes in the countries where the revenue is generated. No one in their right mind would give up 35% of their wealth simply to move it to a different country, and nor should they.
Please go read the links. This is not about the sales happening in countries outside of the US. This is about the billions of dollars inprofits Apple, Microsoft, Google and others would otherwise be making on their US sales being shifted around to low-tax havens using clever internal licensing agreements. For example, see http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
> It has iTunes set up in Luxembourg, but that's a very real company.
Sure, but is it really operating out of Luxembourg? I suspect most of their employees are here in the States.
Sure, but is it really operating out of Luxembourg? I suspect most of their employees are here in the States.
Apple has a company here in the States and in Luxemborg. US employees are employed by the US corporation.
Yup, they have real people employed by, and working in Luxembourg.
Imagine how worse this problem is for European countries, which face the same tax avoidance, and have to sustain massively more expensive public sectors.
Europe is a big diverse place... I would imagine you couldn't really generalise to accurately.
Also offset by comparative minuscule military spending and far more efficient health and corporate/public welfare. But [citation needed], just generalisations from an antipodean armchair.
Also offset by comparative minuscule military spending and far more efficient health and corporate/public welfare. But [citation needed], just generalisations from an antipodean armchair.
To be fair, just about everyone reading this will probably have more cash than the USA in another week or two.
At this burn rate, it's more like 3 days...
http://www.zerohedge.com/news/treasury-cash-drops-15-billion...
http://www.zerohedge.com/news/treasury-cash-drops-15-billion...
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.
(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.
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.
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.
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.
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?).
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?).
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.
Money needs to move and it's not right now.
I agree. The question is: how do you fix it?
In the case of the big corporations, for example, I see no direct, freedom-compatible way of getting them to spend that money. The only way I see that might work (though here Apple might still be a special case) is to create an environment where businesses see an increase in demand as an incentive for increased investment.
Then the question becomes where that demand should come from, and the most feasible short-term answer (the government) is almost universally ideologically opposed (yes, even Democrats these days seem to shy away from direct spending to stimulate the economy).
In the case of the big corporations, for example, I see no direct, freedom-compatible way of getting them to spend that money. The only way I see that might work (though here Apple might still be a special case) is to create an environment where businesses see an increase in demand as an incentive for increased investment.
Then the question becomes where that demand should come from, and the most feasible short-term answer (the government) is almost universally ideologically opposed (yes, even Democrats these days seem to shy away from direct spending to stimulate the economy).
I could think of a number of ideas that would be severely unpopular.
One idea: Start taxing people based on their net worth. It'd be for the greater good after all, right?
One idea: Start taxing people based on their net worth. It'd be for the greater good after all, right?
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&#...
http://harryjerry.com/tech/how-apple-products-are-made-in-fo...
http://www.google.com/publicdata/explore?ds=usunemployment&#...
Aren't companies legally required to act in the vest interests of shareholders?
Overpaying for production out of patriotic racism doesn't seem to fit that mould.
Overpaying for production out of patriotic racism doesn't seem to fit that mould.
No. Some free-market fundamentalists say that companies should have an ethical obligation to maximize profit for their shareholders.
I think the law says that companies are required to follow their constitution. Generally, the board of directors interprets that constitution, and then tells the CEO what to do.
Shareholders may be able to vote to change the constitution, but this would be covered by the company's constitution.
I think non-profits can be companies. That would be a very clear example of companies that are not legally required to act in the interests of shareholders.
I think the law says that companies are required to follow their constitution. Generally, the board of directors interprets that constitution, and then tells the CEO what to do.
Shareholders may be able to vote to change the constitution, but this would be covered by the company's constitution.
I think non-profits can be companies. That would be a very clear example of companies that are not legally required to act in the interests of shareholders.
"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.
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.
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.
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.
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.
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.
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.)
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.)
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.
Then I agree that the number is pretty much meaningless. The government can easily increase their operating cash balance simply by incurring more debt. It's the debt, and the deficit that seem most relevant to my untrained mind.
In fact, if you want to compare with a corporation, I'd compare the entity's deficit as a percentage of its revenue.
In fact, if you want to compare with a corporation, I'd compare the entity's deficit as a percentage of its revenue.
The government can easily increase their operating cash balance simply by incurring more debt.
Except, and this is the whole reason that we currently have big problems, the Government currently can't legally incur more debt, unless Congress passes an increase to the debt ceiling. So cash-on-hand is currently a serious issue.
Except, and this is the whole reason that we currently have big problems, the Government currently can't legally incur more debt, unless Congress passes an increase to the debt ceiling. So cash-on-hand is currently a serious issue.
And so trillion dollar changes to a major world economy of 310 million people are made by last minute bickering.
It's boggling.
It's boggling.
Yeah, it's a titanic game of chicken between the dominant parties. As The Economist put it, "biggest unforced error in history still on schedule".
http://www.economist.com/blogs/freeexchange/2011/07/democrac...
http://www.economist.com/blogs/freeexchange/2011/07/democrac...
How do giant stacks of uninvested cash in corporate coffers improve the economy? I wish someone could explain this.
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.
Supply-side economists, take note.
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.
They want lower revenues for the government. I would hope that it's not the same philosophy for their businesses.
They also want a smaller scope for the government. So it's not like saying 'I want to run this business but bring in less money', it's more like saying 'I want to run a smaller business, so what departments can we do without'. Smaller business may actually make more profit (read: be more efficient) than the larger one.
I try not to claim a political preference left or right[1], but to prevent confusion I do feel they're trying to make this 'business' much smaller than it needs to be.
[1] My political preference is merely that politicans are like diapers. They need to be changed regularly, and for the same reason.
I try not to claim a political preference left or right[1], but to prevent confusion I do feel they're trying to make this 'business' much smaller than it needs to be.
[1] My political preference is merely that politicans are like diapers. They need to be changed regularly, and for the same reason.
Does part of corporate "efficiency" include billions of dollars in bonuses?
That doesn't seem very efficient to me. The effect of large bonuses on the cost of administration seems a bit high.
That doesn't seem very efficient to me. The effect of large bonuses on the cost of administration seems a bit high.
No, they want spending to be less than or equal to revenues. That's the only rational way to run a business.
"That's the only rational way to run a business."
Actually, it's not - ask any business that's taken funding, borrowed to invest, or even run an overdraft as part of their low season. Spending less than or equal to revenues is one way to run a business, especially a small business that you only intend to grow incrementally (if at all). Borrowing to invest for faster growth is a very rational way to run a business in many situations (market opportunity, large personal vision etc).
Again, I'm just addressing the business analogy - here's my politics disclaimer http://news.ycombinator.com/item?id=2822770
Actually, it's not - ask any business that's taken funding, borrowed to invest, or even run an overdraft as part of their low season. Spending less than or equal to revenues is one way to run a business, especially a small business that you only intend to grow incrementally (if at all). Borrowing to invest for faster growth is a very rational way to run a business in many situations (market opportunity, large personal vision etc).
Again, I'm just addressing the business analogy - here's my politics disclaimer http://news.ycombinator.com/item?id=2822770
To clarify, I meant over the long term. If you're not making profits or at least breaking even over the long term (spending <= revenues), you're out of business.
The problem with the US is that they aren't just borrowing in a low season, they're borrowing every season.
The problem with the US is that they aren't just borrowing in a low season, they're borrowing every season.
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?
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!
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.
What will happen to the American if the congress does not vote on the rise ?
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.
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.
Not really. One thing we can be grateful for is that neither party really wants a default, because neither party is confident that it would be the electoral beneficiary.
It might seem that Republicans would get the benefit, but this fact in itself provides a reason for people to blame Republicans if things go bad, since they'll assume (as you appear to be doing) that they caused the default in order to get the benefit. This makes it pretty much a wash -- if bad things happen, both sides will blame the other and we can't quite see in advance how it'll all play out in the court of public opinion.
It might seem that Republicans would get the benefit, but this fact in itself provides a reason for people to blame Republicans if things go bad, since they'll assume (as you appear to be doing) that they caused the default in order to get the benefit. This makes it pretty much a wash -- if bad things happen, both sides will blame the other and we can't quite see in advance how it'll all play out in the court of public opinion.
Disagree strongly. If catastrophe happens, voters just may remember who caused it. I'd like to come back to this comment in 16 months.
Oh if only that were even remotely realistic, what a wonderful world this would be, full of love and joy and happiness, instead of the miserable, hate filled and self destructive reality we actually live in.
Adlai Stevenson said it best: When a supporter told him he "had the vote of the thinking man", he replied "Thank you, but I need a majority to win."
It's funny because it's true. It's also very very sad, because it's true. The vast majority of the voting public are idiotic to the point of absurdity. Let's take a trip down memory lane and look at some of the mind numbingly stupid things many and most of the american electorate believe/believed.
Health Care reform = Death Panels & Socialism
Bill Clinton was/is a serial killer.
Gay Marriage is immoral
Al Gore claimed to invent the internet. Al Gore invented the internet.
18% of people believe Obama is a muslim. That's up 7 points on the previous year. 34% of people DON'T know that Obama is a Christian.
45% of republicans believe Barrack Obama was born outside of the United States.
99% of republicans believe John McCain was born IN the United States.
Global warming is a myth/hoax.
There is a god.
I'll save the best till last. The following are all conscious lies, that came out of the mouths of US politicians, and were believed by significant amounts, if not the majority of the US electorate:
Saddam Hussein was responsible for 9/11
Iraq and al-Qa'ida were working together
Iraq was seeking uranium from Africa
Iraq was trying to import aluminium tubes to develop nuclear weapons
Iraq had WMDs
Iraq had missiles that could reach the UK
Saddam Hussein had the wherewithal to develop smallpox
US and British claims were supported by the IAEA inspectors
Iraq was obstructing the inspectors
Iraq could deploy its weapons of mass destruction in 45 minutes
Troops would face chemical and biological weapons
Iraq's oil money would go to Iraqis
And the coup de grâce!
WMD's were found in Iraq, or to quote Bush precisely from may 30th 2003: "Those who say we haven't found the banned manufacturing devices or banned weapons - they're wrong. We found them."
All lies, every single one of them. You see, here's the rub: The truth doesn't matter one teeny tiny incy wincy little bit. No where on the face of this planet do electorates vote on truth, or even policy. They have no long term memory. And heaven forbid they ever change because it would be impossible to win a majority if they did.
All the republicans want to do is destroy Barrack Obama. There's no plan B, they have no idea what they would do if they did destroy him and they don't care how much damage they do in the process. It's a scorched earth policy. But if they do force a default and ruin the global economy, come the next election it wont matter whose fault it was because that wont be the story. The story will be whatever the republicans want it to be. It will be a lie, and things will be so bad, people will be so angry, that they'll believe it.
Adlai Stevenson said it best: When a supporter told him he "had the vote of the thinking man", he replied "Thank you, but I need a majority to win."
It's funny because it's true. It's also very very sad, because it's true. The vast majority of the voting public are idiotic to the point of absurdity. Let's take a trip down memory lane and look at some of the mind numbingly stupid things many and most of the american electorate believe/believed.
Health Care reform = Death Panels & Socialism
Bill Clinton was/is a serial killer.
Gay Marriage is immoral
Al Gore claimed to invent the internet. Al Gore invented the internet.
18% of people believe Obama is a muslim. That's up 7 points on the previous year. 34% of people DON'T know that Obama is a Christian.
45% of republicans believe Barrack Obama was born outside of the United States.
99% of republicans believe John McCain was born IN the United States.
Global warming is a myth/hoax.
There is a god.
I'll save the best till last. The following are all conscious lies, that came out of the mouths of US politicians, and were believed by significant amounts, if not the majority of the US electorate:
Saddam Hussein was responsible for 9/11
Iraq and al-Qa'ida were working together
Iraq was seeking uranium from Africa
Iraq was trying to import aluminium tubes to develop nuclear weapons
Iraq had WMDs
Iraq had missiles that could reach the UK
Saddam Hussein had the wherewithal to develop smallpox
US and British claims were supported by the IAEA inspectors
Iraq was obstructing the inspectors
Iraq could deploy its weapons of mass destruction in 45 minutes
Troops would face chemical and biological weapons
Iraq's oil money would go to Iraqis
And the coup de grâce!
WMD's were found in Iraq, or to quote Bush precisely from may 30th 2003: "Those who say we haven't found the banned manufacturing devices or banned weapons - they're wrong. We found them."
All lies, every single one of them. You see, here's the rub: The truth doesn't matter one teeny tiny incy wincy little bit. No where on the face of this planet do electorates vote on truth, or even policy. They have no long term memory. And heaven forbid they ever change because it would be impossible to win a majority if they did.
All the republicans want to do is destroy Barrack Obama. There's no plan B, they have no idea what they would do if they did destroy him and they don't care how much damage they do in the process. It's a scorched earth policy. But if they do force a default and ruin the global economy, come the next election it wont matter whose fault it was because that wont be the story. The story will be whatever the republicans want it to be. It will be a lie, and things will be so bad, people will be so angry, that they'll believe it.
> The only thing anyone can say with any certainty is that the next president of the USA will be a Republican
And they'd be lying.
And they'd be lying.
So...when's the buy-out?
It's time to nationalize Apple, sell its assets and use the money to take off of the crisis.
Sarcasm?
Just kidding, but some people aren't just able to accept a joke about Apple.
All this does not make my initial comment less true, though.
All this does not make my initial comment less true, though.
Can't wait to see what iBama will look like :)
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...