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And returning that money to shareholders (dividends) would incur income tax to the recipient, thus the tax-man gets his due. A much better outcome than just holding cash overseas

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If they return money to shareholders via buybacks, there is no tax. Only when the shareholder sells will potential capital gains be taxed.

Someone has to sell shares for Apple to buy them. Those sellers pay tax.

If they realise capital gains and they live in the US. E.g. Belgian stockholders of Apple don't pay any taxes (not in Belgium, not in the US) on capital gains.

So now we'll just have private offshore holdings instead of business holdings?

They probably would pay withholding taxes if their assets are US-domiciled. I.e. of they bought US-listed shares from a US exchange.

No. Only dividends are subject to withholding taxes (and are taxed twice, once in the US at 15%, the remainder taxed at 27%). It's a crazy system.

Before you think of moving to Belgium: US citizens can't escape the IRS, no matter where they live, and so do pay capital gains tax.

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