Apple may have enough cash on hand to make Scrooge McDuck's money vault look like a kiddie pool by comparison, but according to SeekingAlpha, most of that cash is effectively trapped overseas. US$54 billion of Apple's overall $82 billion in cash is in offshore accounts, and Apple cannot repatriate that money to the States unless it wants to pay a huge 35 percent corporate tax on it.
If Apple attempted to bring that money into the States, right off the bat through the magic of taxes that $54 billion would transform into $35.1 billion, with the other $18.9 billion disappearing down the federal money hole. With that much cash at stake, it's no wonder that Apple hasn't been in any hurry to repatriate its huge foreign cash reserves.
SeekingAlpha's analysis of Apple's 10Ks shows that Apple's foreign cash and investments are growing far faster than those in the US, and with sales in China continuing to ramp up year after year, that pace is only going to increase.
Apple and other companies have lobbied for a repatriation tax holiday to temporarily lower the tax rate from 35 percent to something more palatable to corporations, in the neighborhood of 5 to 9 percent. That proposal has met with strong resistance from the current US administration, however, which has said that any corporate tax holiday must come as part of an overhaul of the entire corporate tax structure, something that's unlikely to happen in the near future.
Meanwhile, as Apple's foreign cash hoard grows, the money is effectively useless to Apple and its shareholders. They could build a stack of dollar bills 3400 miles tall, but can't they can't do much else with it for now.
Most of Apple's $82 billion cash stockpile is 'trapped' overseas originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 11 Jan 2012 19:30:00 EST.