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comment by mk
mk  ·  3312 days ago  ·  link  ·    ·  parent  ·  post: Why Are Corporations Hoarding Trillions?

Yes, it is unseemly. That doesn't mean that I don't understand why they do it, and the genesis of this situation clearly lies with the legislature. Still, the decision is Google's to make. Large companies like Google play a significant role in shaping our world. That is, I don't see everything that Google does as an inevitable response to market demand.

My example of selling babies to a food processor is absurd. However, I don't think it is wrong to fault both the US legislature and Google. IMO it is reasonable to hold corporations to expectations other than maximizing shareholder value.

    Strange that dividends and stock buybacks are not mentioned in the article, two traditional ways of disposing with excess cash that keep shareholders happy.

True. Buy backs and dividends have been relatively frequent over these past few years. However, I have read that even Apple has issued bonds for these purposes. That might be part of the reason. When debt is so cheap, why spend money?





wasoxygen  ·  3312 days ago  ·  link  ·  

    the decision is Google's to make

No matter what legal amount Google pays in taxes, it will be possible for Google to legally pay more in taxes, right? How should Google decide how much to pay?

You do not pay more than you are required to pay in taxes, do you? Perhaps you even spend money on tax software or tax advisers to discover new legal deductions.

Maneuvering to pay fewer taxes can be described as "dodging," but tax law is intentionally complex, as legislators attempt to create incentives that lead to desirable outcomes. I think it's asking a lot of the taxpayer to both follow the letter of the law and also figure out the intention of the law and make sure they do not subvert it.

    Apple has issued bonds for these purposes.

It seems strange that Apple would sit on cash while also borrowing cash to give to investors. I can think of two explanations, both probably wrong.

1. The cash mountain is in a tax shelter, so importing it to pay investors would cost a tax penalty.

2. Apple considers its cash position to be a healthy amount, and it only appears absurdly large because Apple itself is absurdly large. Making a cash distribution to investors without reducing their cash position requires taking on debt.