by Summary:
Dean Baker explains how international capital flow (capital flight and repatriation) is just a matter of switching account balances. There is no "cross-border" transfer of funds in "bringing back" dollars earned abroad. This is what bringing money back to the United States means. Under the old tax law companies often attributed legal control of profits to foreign subsidiaries, so that they could defer paying taxes on this money. However the money was often actually held in the United States, since Apple could tell the subsidiary to keep the money wherever it wanted. For this reason the economic significance of bringing the money back to the United States is almost zero. The legal change of ownership is leading to the collection of taxes, but this is in lieu of the considerably larger
Topics:
Mike Norman considers the following as important: Apple, international capital flows
This could be interesting, too:
Dean Baker explains how international capital flow (capital flight and repatriation) is just a matter of switching account balances. There is no "cross-border" transfer of funds in "bringing back" dollars earned abroad. This is what bringing money back to the United States means. Under the old tax law companies often attributed legal control of profits to foreign subsidiaries, so that they could defer paying taxes on this money. However the money was often actually held in the United States, since Apple could tell the subsidiary to keep the money wherever it wanted. For this reason the economic significance of bringing the money back to the United States is almost zero. The legal change of ownership is leading to the collection of taxes, but this is in lieu of the considerably larger
Topics:
Mike Norman considers the following as important: Apple, international capital flows
This could be interesting, too:
Mike Norman writes Sputnik — Huawei Sets Record Share of China’s Smartphone Market Beating Apple
Mike Norman writes Zero Hedge — China Accuses Apple, Foxconn Of Breaking Chinese Labor Laws
Mike Norman writes Tyler Durden — China Threatens Apple With “Anger And Nationalist Sentiment” If It Doesn’t Share The Wealth
Mike Norman writes Eli Meixler — Tim Cook Says Learning How to Code is More Important than English as a Second Language
This is what bringing money back to the United States means. Under the old tax law companies often attributed legal control of profits to foreign subsidiaries, so that they could defer paying taxes on this money. However the money was often actually held in the United States, since Apple could tell the subsidiary to keep the money wherever it wanted.
For this reason the economic significance of bringing the money back to the United States is almost zero. The legal change of ownership is leading to the collection of taxes, but this is in lieu of the considerably larger tax liability that Apple faced under the old law.
It would have been helpful if these points were made more clearly in this NYT piece. It does usefully point out that we don't know the extent to which the expansion plans announced by Apple would have occurred even without the tax cut.Beat the Press
Apple Transfers $252 Billion in Citigroup Account from Irish Subsidiary to Parent Company
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C