Apple’s new I-phone is out. It’s i-watch is also out on the market. Apple also shifted $79 billion overseas from 2009-2012 so it didn’t need to pay a single cent of taxes on it. Apple has plenty of money on hand to pay taxes, but then the company would have less money to pay its shareholders, so the argument goes, except its not paying its shareholders tens of billions of dollars its holding. And if the company paid taxes so that schools could operate, police could work, and roads could be maintained, Apple would have less money to pay its shareholders what it isn’t paying them. By not paying taxes, Apple is crushing job growth since there are less policemen, teachers and road workers on the job and demanding goods and services. Sound confusing? It isn’t.
According to the Guardian newspaper, (bn = billion below).
“At the last count, at the end of June, Apple had $164.5bn of “cash, cash equivalents and marketable securities” on its balance sheet – up a heady $18bn on just nine months earlier. The vast majority of that money – $137.7bn – is held by Apple’s foreign subsidiaries. From September 2013, its overseas cash mountain increased by $26bn.
In April, US Trust, a private bank, calculated that Apple’s hoard, then $159bn (£97bn), was more than twice the UK’s cash reserves, which stand at $70bn, or roughly equivalent to Britain’s annual spending on education and housing combined.
Only $8.3bn of Apple’s stash is actually in hard cash. The rest is invested in government and corporate securities and other investments. Its biggest holdings are $35.5bn in US treasury bonds and $73bn in corporate securities. Apple also holds sizable investments in foreign countries’ debt, commercial paper-based and mortgage-backed securities, all controlled by its own fund management group, Braeburn.
This giant portfolio is bigger than the world’s largest hedge fund, Bridgewater, which manages about $150bn. But Braeburn Capital – named after the apple – is not run from Wall Street. It is based in Reno, the capital of Nevada, a state where there is no corporation tax or capital gains tax.”
Apple management, in other words, is charging too much for its products, most likely in concert with its supposed competitors. Management and its not so rivals are regulating their market, so that they can regulate their share prices slowly upward, among other things. (Most major US corporations do this.)
Otherwise, if the market in these items were truly competitive, profits would be minimal and Apple’s share prices would be much lower than today’s share price. That overcharge payment to its customers is redistributed to its wealthy shareholders via higher profits, dividends and share prices. It’s an income redistribution scam. Management keeps the billions in reserve for hard times, which it will divvy up to its shareholders in the hopes that such a move will keep its stock price up, which coincidentally, is the only real way to keep score as to how management is doing.
Today Apple’s share price is $102.80. If it were a truly competitive business, the share price might be closer to $5. Which suggests Apple’s management team would not be so wealthy.
What would happen if Apple management stopped regulating its profits and retained earnings? What would happen if Apple suddenly decided to award its billions of dollars to its shareholders? The price of shares would rise in the short run, perhaps to two to three times its current rate, but then awarding those billions to the shareholders (the powerless owners of Apple–in theory) would not leave Apple management with a healthy reserve for when hard times hit.
The other thing that would occur is that more jobs would be created, inequality would be lessened, and the economy would be more robust than the historically lackluster economy the US has today. Further, if all corporations stopped regulating their markets and engaged in real competition, the positive effect on the US economy would drive it forward and strengthen it like never before.
But that’s not going to happen with the massive corruption of government and both major political parties. That’s why the economic game is totally rigged against the 99 percent.
Money–Apple Shifts Billions Overseas
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