{"id":20103,"date":"2013-05-04T09:20:42","date_gmt":"2013-05-04T14:20:42","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=20103"},"modified":"2013-05-04T09:20:42","modified_gmt":"2013-05-04T14:20:42","slug":"this-is-why-cash-rich-apple-is-borrowing-money-on-the-bond-market","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2013\/05\/04\/this-is-why-cash-rich-apple-is-borrowing-money-on-the-bond-market\/","title":{"rendered":"This is why cash-rich Apple is borrowing money on the bond market"},"content":{"rendered":"<p>In one word, <a href=\"http:\/\/www.economist.com\/blogs\/buttonwood\/2013\/05\/apples-bond-issue\" target=\"_blank\">taxes<\/a>:<\/p>\n<blockquote><p>What a crazy world. Apple, a company with $145 billion of cash, is issuing some $17 billion of debt to buy back its own shares. Why doesn&#8217;t it just use its cash to do the same thing? First, because a lot of that cash is overseas, and bringing it back to America would incur a tax charge. Second, because interest rates are low and debt interest is tax-deductible, making this look a great arbitrage.<\/p>\n<p>But think of it from the point of view of the hard-working American taxpayer. Apple&#8217;s money will still sit overseas and not be invested at home to create jobs. Apple&#8217;s tax bill will fall, as it offsets the interest payments against its profits. The buy-back will probably push up the share price in the short term, boosting the value of executive options; profits from those options will probably be taxed at the long-term capital gains tax rate of 15%, lower than the rate many workers pay. Organising a bond issue, rather than using a company&#8217;s own cash, incurs costs in the form of fees to bankers on Wall Street; the same bankers taxpayers helped support five years ago.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>In one word, taxes: What a crazy world. Apple, a company with $145 billion of cash, is issuing some $17 billion of debt to buy back its own shares. Why doesn&#8217;t it just use its cash to do the same thing? First, because a lot of that cash is overseas, and bringing it back to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[831,25,13],"tags":[160,436,118],"class_list":["post-20103","post","type-post","status-publish","format-standard","hentry","category-business","category-economics","category-usa","tag-apple","tag-banking","tag-taxes"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-5ef","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/20103","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=20103"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/20103\/revisions"}],"predecessor-version":[{"id":20104,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/20103\/revisions\/20104"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=20103"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=20103"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=20103"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}