We’ve already written a few times on how Corporations Continue to Lobby For Trillion Dollar “Tax Holiday” and how The Corporate Tax Code Is a Big Clusterf#ck, but the issue of how corporations function in terms of flow through profit centers for the wealthy is an important concept for people to understand.  Let’s start with this fact:

Apple, Inc. is sitting on $98 BILLION in cash currently

Just let that sit in for a second how much money we’re talking about here.  There are many politicians on both sides who would have you believe that if only we would allow corporations to take the $1.2 trillion in offshore cash assets and “repatriate” those profits back into the American system – it “will spur investment, economic growth, and job creation”.  But as we’ve pointed out before in our article Corporations Continue to Lobby For Trillion Dollar “Tax Holiday”:

America has tried the “corporate tax holiday” before – in 2004; people were told that if companies could just bring these foreign assets (which they’ve been hiding overseas) back to the mainland…the country would see a windfall in tax revenues.  Only – as the chart below shows – all that did was incentivize companies to increase the amount of corporate profits they hid overseas.  It went from an average of $342 million a year on average to an average of $1.3 BILLION a year – immediately thereafter.  It’s not a complicated concept….this is the story of Pavlov’s dog told as corporate profits.

Now – there is a bill in the Senate called the Foreign Earnings Reinvestment Act that would allow corporations the ability to bring money that they’ve been hiding overseas back to the U.S. at a tax rate of as low as 5.25%.  Remember – this money that’s sitting overseas is due to a manipulation of the corporate tax code, and these corporations REALLY want to bring that money back to the U.S. so they can distribute it in the form of dividends to their shareholders.

So – let’s put a their claims to the test….Apple announces today that it is going to do three things with $45 billion over three years:

#1 – Start giving shareholders a dividend
#2 – Buyback stock to raise the price of shares for shareholders
#3 – Sit on the $64 billion in cash held overseas to prevent paying the “normal” tax rate in order to “repatriate profits”

The Washington Post reports:

Apple said that it will pay a quarterly dividend of $2.65 per share, starting in its fiscal fourth quarter, which begins July 1.

The dividend works out to $10.60 annually, or 1.8 percent of the current stock price. By comparison, Microsoft Corp., pays 2.5 percent of its stock price in dividends, and Hewlett-Packard Co. pays 2 percent.

Apple said the $10 billion share buyback program will begin next fiscal year, which starts Sept. 30, and run for three years.

Now – you may notice that with $98 billion dollars…there is no interest in investing in businesses in America….sharing profits with employees that don’t have an Executive title nor are they necessarily hiring more people.  Eric Cantor said companies who only have to pay a 5.25% corporate repatriation tax “will spur investment, economic growth, and job creation”.  But Apple is choosing to take $45 billion and the only investment and economic growth that is being spurred is for those who are shareholders.  There is no “trickle down”.  And Apple is paying ZERO in taxes to do this, because they already have this money stateside.

In fact – as Brad Plumer points out – Apple has been lobbying for the “corporate tax holiday”:

Lately, Apple has been lobbying Congress for a new repatriation holiday. And plenty of politicians have proved receptive to the notion, including the major Republican candidates for president. The CBPP estimates that such a holiday would boost U.S. tax revenues in the first few years, as companies like Apple and Google brought their war chests home and paid the lower rate. But the holiday would then lead to bigger deficits over the long run, as those companies gambled that tax holidays would become a regular occurrence and park evenmore cash overseas, biding their time. All told, CBPP projects that a new repatriation holiday would add $79 billion to the deficit over ten years.

So – case in point…when companies are able to take back the $1.2 trillion in money they have hidden overseas…as we’ve shown before HERE – it’s not going to help the American people….it’s going to help shareholders.  And I’d like to remind everyone that the vast majority of those shareholders fall in the 1% of richest Americans.  In fact – 57% of all capital gains go to the 1%.  So – while the rich gets sweet loopholes that Mitt Romney declines to say whether or not he’ll support, Republicans go on the attack to ensure we either eliminate the minimum wage or prevent it from being increased.

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