According to recent figures, U.S. companies hold an astounding $1 trillion in overseas bank accounts. The reason for holding this ungodly amount of money overseas? Because bringing the cash back to the United States would require a rather significant tax hit. So what are these companies doing with all this cash? Well, up until recently, not a lot. But that’s beginning to change and it’s one reason why individual investors should pay very close attention to this phenomenon… First, some background… This $1 trillion is a result of profits earned from overseas subsidiaries of… Read More
According to recent figures, U.S. companies hold an astounding $1 trillion in overseas bank accounts. The reason for holding this ungodly amount of money overseas? Because bringing the cash back to the United States would require a rather significant tax hit. So what are these companies doing with all this cash? Well, up until recently, not a lot. But that’s beginning to change and it’s one reason why individual investors should pay very close attention to this phenomenon… First, some background… This $1 trillion is a result of profits earned from overseas subsidiaries of global giants like Microsoft (Nasdaq: MSFT), GE, (NYSE: GE), PepsiCo (NYSE: PEP) and others and were already taxed by a foreign government. Corporations often don’t repatriate most of these funds, as it would result in double taxation. Current U.S. tax laws require paying a corporate tax rate as high as 35% — regardless of whether taxes have already been paid in another country. As a result, many companies are choosing to keep the cash outside of the United States, and it’s hard to blame them. In many cases, the cash… Read More