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Comment by seanmcdirmid | Hacker News Reader

And all of that money was earned overseas. It is up to the company to repatriate it or throw it back into overseas operations. This is kind of fair: if say Germans pay money to buy Windows, why not use some of the profit there in Germany rather than bringing back to the states?

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As someone who's from India, but lives in the Palo Alto area, this is an especially astute comment. America's still clearly the innovation leader in many markets, and I think it's fair to expect that many young people (if not governments) look to these corporations to do what's right.

It's hard to know what's right, especially in a global marketplace. But this is certainly a good option.

This makes sense to me. If you make this money overseas... shouldn't you use the money in whatever nation you made it in to make that nation better ???? I think people who talk about taxes really miss this point. Because the taxes talk is all predicated on a foregone conclusion that bringing money to the US is the best thing you can do for shareholders. I'm not sure that's true.

In the case of Apple or Microsoft, most of the value (r&d) is generated in the US, so it would be fair to tax them there. Other countries already have sales tax.

Most? Microsoft has 128,000 employees worldwide, 61,000 of them in the USA.

If I understood correctly, the problem is that the money made abroad, is made by using the intellectual property owned (and presumably gained) in the U.S and some people think the U.S. should get a share of those profits.

However:

1) while it's true that good part of the actual work has been done in the U.S., great part of the value comes from the effort (marketing, sales, R&D, ...) that happens in the subsidiaries; it's not easy to quantify, but certainly those people are actually doing something, aren't they?

2) as far as I understood, the U.S. income tax is not paid until that money gets back to the U.S. In fact it stays abroad, deferring the tax payment. The subsidiary could use that money to invest and expand the foreign market, with indirect but substantial domestic benefits.

I believe the issue of tax loophole in the country where the actual subsidiary works, is a different matter; but I don't understand what's the problem per-se with having stashes of oversea money held by a foreign subsidiary of your company.

By "earned overseas", it is meant:

-- a U.S. customer bought software written in the U.S. in a U.S. store and used it in the U.S.

-- "Microsoft US" paid "Microsoft Tax Dodge Inc." a fat fee for the use of the "Microsoft" name, which it had previously sold to "Microsoft Tax Dodge Inc."

-- as a result of these two transactions, no profit was earned in the U.S. but a large profit was "earned overseas"

-- curiously, the particular place where the profit was "earned overseas" does not tax foreign income, meaning no tax will ever be paid on this profit "earned overseas"

This is a definition of "earned overseas" that only a tax accountant would agree with.

That is not true at all. Microsoft actually sells things in other countries...imagine that...

If you're new to this discussion of how multi-national corporations avoid taxation, you probably should avoid posting on the subject until you're up to speed.

http://en.wikipedia.org/wiki/Double_Irish_arrangement

Microsoft is - after finagling - showing billions of dollars in annual profits in a Bermuda subsidiary consisting of some paperwork in a lawyer's office. (And they are far from the only offender.) No, this isn't because Microsoft is selling billions of dollars worth of MSOffice in Bermuda.

http://www.businessweek.com/articles/2014-03-20/companies-of...

None of those links accuse Microsoft of that.

Edit: if you want to point out something that does, feel free, but don't sling mud without.

Your reading comprehension is really embarrassingly limited, since both links are all about Microsoft and other companies doing that. Or I suppose you are just lying in order to troll. Not sure what the point of continuing here is; you are not entitled to your own facts.

Microsoft is so notorious for their abuse that they're attracting congressional reports on the issue:

http://www.businessinsider.com/apple-microsoft-avoids-taxes-...

Because it wasn't earned overseas in the way you're suggesting. It was "earned" overseas. Often companies route sales through overseas shell companies. See the StarBucks debacle in the UK. Microsoft's explanation of them being a "global" company is BS. They will wait for a corporate tax holiday to bring it back at a much reduced rate, or a chunk of it at almost no rate.

> It was "earned" overseas.

I work for Microsoft in Beijing doing R&D; I disagree and am kind of offended by your assessment.

what about all the copies of windows in use in non-US countries? Those arent considered global?

Right, and do you need to create a company in Ireland to sell copies of Windows in France? The money is most certainly funnelled into a select few "companies" set-up in very specific countries. This is classic big business accounting and perfectly legal. It's also utter BS to spin it any other way than trying to avoid paying taxes on the money.

Regardless of fairness, in a time of high unemployment, the US government should encourage US corporations to repatriate the money and invest it domestically, since that's good for our economy.

What about the German, Chinese, Indian economies? Besides, do you know how hard it is to hire programmers in the states? Why not take advantage of programming talent in other countries by opening up R&D centers outside of the USA. Google also does this to a huge benefit.

Is Hackernews USA only? Some of these posts are confusing, like everyone is posting from and about the states.

> What about the German, Chinese, Indian economies?

This particular cash is not doing anything productive for any economy, except of generating interest and a bit of taxes upon it.

The cash listed in the article is Microsoft's entire overseas cash supply, including, I would rightly suppose, the money that pays my salary (since I work for MS outside of the USA). Are you saying that's not true? Or are you claiming that I'm not doing anything productive?

The money used to pay salaries, rents, equipment etc. is definitely negligible when compared to the vast buckets of cash just sitting around on Irish and other obscure bank accounts.

Shit, it'd be really interesting to see what would happen if MS/AAPL got the possibility to transfer their entire overseas cash into the US without taxes. Probably 100B$ could provide a massive growth...

> Besides, do you know how hard it is to hire programmers in the states? Why not take advantage of programming talent in other countries by opening up R&D centers outside of the USA.

No, the better solution (for America) is to also allow more immigration of tech workers to the US, who can be employed using that repatriated cash. Then those tech workers will create all kinds of service sector jobs that unemployed Americans can work in.

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