<story><title>Apple, Microsoft, and Google hold 23% of all U.S. corporate cash</title><url>http://www.geekwire.com/2016/apple-microsoft-google-hold-nearly-quarter-u-s-corporate-cash/</url></story><parent_chain></parent_chain><comment><author>WildUtah</author><text>The US tax code heavily punishes companies that hold cash in a variety of ways. The motive is to subsidize banks by requiring companies to rely on short term debt for operations. It&amp;#x27;s the biggest and most lucrative of subsidies for the banking industry and laundering such subsidies is how many bankers get rich. For instance, Mitt Romney made his money that way.&lt;p&gt;(The main tax code subsidies here are the business interest loophole and the accumulated earnings tax)&lt;p&gt;Usually a big company holds almost no liquid assets and hands profits out to bondholders and shareholders or invests actively to grow, even in unrelated businesses. That&amp;#x27;s to avoid tax penalties.&lt;p&gt;Apple, Google, Microsoft, and the like are holding masses of cash outside the USA. Gridlock in Washington and a stagnant and irrational corporate tax code make it very hard to bring cash home to invest for American companies. Therefore you find tech companies with few overseas expenses exporting services and accumulating cash they can&amp;#x27;t bring home.&lt;p&gt;(The main tax issue here is the non-territorial tax system in the USA. All other developed countries have a territorial system.)&lt;p&gt;Other countries can see this is a problem that kills jobs and wages at home so they don&amp;#x27;t do it. Obama has tried to fix it and Trump&amp;#x27;s main tax proposal is aimed at it, but both parties in Congress block change. Republicans don&amp;#x27;t want to hand Obama a victory and would rather hand out goodies to donors with loopholes than simplify taxes and Democrats just want to punish profitable multinationals even if it kills jobs.&lt;p&gt;And Wall Street is very mercurial with credit for tech companies, especially growing ones, so they can&amp;#x27;t rely on the banking subsidies.&lt;p&gt;The result is that tech giants are the only companies with a reason to accumulate cash so they overwhelmingly are the only ones that do so.&lt;p&gt;In summary, this is a government regulatory policy that creates cash rich tech companies. It&amp;#x27;s a result of bad decisions on Capitol Hill, not on Wall Street or Sand Hill Road. It is not a stock valuation or corporate strategy issue.</text></comment>
<story><title>Apple, Microsoft, and Google hold 23% of all U.S. corporate cash</title><url>http://www.geekwire.com/2016/apple-microsoft-google-hold-nearly-quarter-u-s-corporate-cash/</url></story><parent_chain></parent_chain><comment><author>gozur88</author><text>I think Occam&amp;#x27;s razor applies here:  It&amp;#x27;s not that management teams have big plans for the money, or that they &amp;quot;believe that something big is coming, but... they’re not sure what it will be&amp;quot;.  It&amp;#x27;s that they don&amp;#x27;t know what to do with the money and there isn&amp;#x27;t much pressure to disburse it.&lt;p&gt;Cash hordes are reflected in the share price, so investors can monetize the cash by selling a few shares.  If you&amp;#x27;re a &amp;quot;buy and hold&amp;quot; investor you don&amp;#x27;t want a dividend because that&amp;#x27;s a taxable event.</text></comment>