May 29

Last week I wrote about The Senate vs Apple, my take on the what can best be described as a circus event in which Tim Cook, Apple’s CEO was questioned by the senate for a nearly three hours regarding Apple’s tax bill. I promised to dig a bit deeper and come back with more. Sometimes the exact word is lacking, but here, I think I got it right. Scapegoating: the practice of singling out any party for unmerited negative treatment. You see, what Apple did, wasn’t just legal, it’s common (and good) business practice. Here are a number of others:


(sorry if it renders a bit small, you can right-click to open it to full size)

What we have here are the top companies holding cash abroad. Indeed, Apple is the largest, but it’s also the largest company in market capitalization. You can see that Microsoft’s cash held overseas is a higher ratio of both total cash they have as well as when compared to the total market cap.

I’m not a believer that “companies are people, too,” but I do believe that taxing a company more is the same as taxing people. These companies are held by all of us, if not as individual shares, then in our retirement accounts. A 35% corporate tax is enough reason for any of these companies to leave dollars earned overseas out of the US. The senate shouldn’t be grilling Apple’s CEO, but rather, Congress, who wrote the tax code. We can do away with much of the craziness with a number of changes to the code;

  • Bring the rate down for repatriated money. This money was earned overseas, taxed overseas, and can just as easily stay there. A 10% re-entry tax should be low enough to bring it back.
  • (If the above fails) – Offer incentives that any job creating expansion of local manufacturing plants will offset the tax on repatriated money, dollar for dollar. In other words, you build a $500M factory, you get to bring back $500M in cash held overseas.
  • The Fed has been printing dollars for years now, trying to turn easy money into an economic expansion. Why not offer a tax free repatriation of funds that will be used to pay dividends? How crazy is a tax code that encourages a company like Apple to issue bonds to raise cash to pay dividends while sitting on $74B tied up overseas? Cash paid out to US shareholders will help to boost the economy.

I have to add, I was disappointed to see very little coverage of this in the weekend news shows. Only CNN’s Your Money did a decent job asking “who is really at fault. Is it Apple for allegedly sketchy tax maneuvers or Congress for creating such a pliable tax code?” What do you think? Is Apple and these other companies going too far to cut their tax bill, or are they doing the right thing for their share holders? Will a low tax rate bring manufacturing jobs back?

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May 26

It’s that time of year again, graduation time. And that’s why today’s round up starts with The Most Important Piece of Financial Advice for College Graduates. I’m not going to spoil the punchline, but I will say, I agree with the article’s advise, and college grad or not, you’ll be a bit wiser for reading it as well.


Above is an image of the new sized fries that are soon to be sold in Japan. It weighs in at 350 grams (just over 3/4 lb) and will sell for 490 Yen ($5 or so). Rumor has it that Mayor Bloomberg is already planning a to launch a pre-emptive strike, writing a law limiting the size of a portion of fries that can be sold in New York City.

The Weakonomist asked Has The Recession Made Us More Informed About Economics? I was asking a similar question after the crash of 2000. And of course I remember the banking crisis of the early ’80s, you know, the Resolution Trust Corp? But I digress. We’ll see if this generation learns any of lessons the prior ones missed.

Next, the Debt Princess tell us What NOT to Do: Live in Denial. It seems the Princess has made a few mistakes and she’s working to right size her financial life. Jessica writes from the heart, and writes in the hope that her story will help others to avoid the mistakes that she’s made. An article that might help you look at your own choices more closely.

Kay Bell offered her take on the Senate’s Inquisition of Apple’s Tim Cook at Apple lauded on Capitol Hill at hearing about its low U.S. taxes. Kay’s not quite as sympathetic to Apple as I am, but I offer her article as a counterpoint to my opinion, and because Crossfire is no longer on the air.

As much as I love a bargain, and often fill a space in the closet with half price laundry soap or TP, it’s good to know What NOT to stock up on in your stockpile! An excellent tutorial at Couple Money on the items you should buy with caution.  I agee with the caution on buying too much fish, meat, etc, so keep an eye on your supermarket sales cycle, usually six weeks from one chicken sale to the next.

And to wrap up the week, at Money Under 30, Can In-Store Health Clinics Save You Money? I’ve found the Minute Clinic at CVS to be a great service, a time saver for me and a savings on the system. No need to go to my doctor’s office for a flu shot. Have you visited your local drug store clinic?

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May 22

There are times that truth to me is stranger than fiction. Earlier today, I saw Tim Cook questioned by multiple senators regarding the US taxes Apple pays. A brief disclaimer, I happen to be an Apple fan, but I’d feel no different if the CEO of any other large company were called to testify.  And I don’t have too much respect for our politicians, a few minutes at a time is all I can listen to them. Fortunately, there’s TiVo and it pause button.

It seems that it just occurred to our esteemed Senators that companies like Apple don’t pay US tax on earnings that were not not realized in the US. In the complex structure  of the world economy, any company with major sales and manufacturing overseas will structure itself in a way that maximizes its returns to shareholders. That would stand to reason. It would also make sense that when there’s manufacturing in China and sales in Asia, that Apple is already paying the taxes due in that region of the world.


From the brief bits that CNBC aired, I caught one Senator asking Tim Cook who his biggest competitor was. Samsung. He was then asked if Samsung was a US company. At that point I was trying to figure out if these questions were meant to be rhetorical or if these guys actually didn’t know that Samsung is a Korean based company. They went on to discuss how Apple’s overall tax burden, worldwide, was a similar percent to what Samsung would pay. (It is.) The real issue comes down to repatriating dollars into the US that were earned and taxed overseas. It’s actually cheaper for Apple to borrow money in the US by floating bonds with interest they can deduct as an expense instead of bringing those overseas dollars here.

Sen Rand Paul spoke up and articulated just what I was thinking –

I am offended by the tone and tenor of this hearing. I am offended by a $4 trillion government bullying, berating and badgering one of America’s greatest success stories.
Tell me one of these politicians up here that doesn’t minimize their taxes. Tell me a chief financial officer that you would hire if he didn’t try to minimize your taxes legally. Tell me what Apple has done that is illegal. I am offended by a government that uses the IRS to bully groups such as the Tea Party but I am also offended by a government that convenes a hearing to bully one of American’s success stories.
I am offended by the spectacle of dragging in here executives from an American company that is not doing anything illegal. If anyone should be on trial here, it should be Congress.
I frankly think the Committee should apologize to Apple. I frankly think Congress should be on trial here for creating a bizarre and byzantine tax code that runs into the tens of thousands of pages, for creating a tax code that simply doesn’t compete with the rest of the world.

Yes, it’s Congress that writes the tax code, the IRS just enforces it. It’s Congress that needs to work to change the laws to encourage growth, not encourage loopholes that avoid tax but aren’t helping to create jobs. I’d propose that Congress pull their collective heads out of the….. sand, and make a few simple changes that would get things started. Dividends are taxed. Apple drops $100M in dividend payments to US shareholders and much of it will taxed, to the extent it’s not held in tax deferred accounts. A simple new law that permits repatriation of funds to pay dividends would be a great start. Next, how about allowing that money to used for any job creating expansion? Instead of berating an American success story, why not ask Mr. Cook what exactly would induce him to build new manufacturing facilities in the US, and listen closely to his answer?

Stranger than fiction is when a presidential candidate refuses to explain the origins of the $100M in his IRA, the Senate is complacent. But when they realize that a $100B company exercises the same care with its finances to minimize its taxes, there’s a hearing. Shame on all of you. Well, except Rand Paul, of course. I plan to watch the entire hearing archived on CSPAN, and will write more on this topic if I uncover anything interesting.

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Apr 12

I miss Frugal Fridays. The last one was Frugal Friday Week 35  and it was published nearly three years ago. I’d like to bring back the concept with a mix of observations, finds, and general approaches to frugality.

A few weeks ago I was looking for a cable to connect an iPad. Not the current ‘lightning’ cable, just the old 30 pin connector.


My favorite office supply store had it. Wow. $20 after tax. So, I looked a bit more and there we are.


Not just a bit less, but remarkably lower in price. 36 cables for the price of 1! Keep in mind, this is just a cable, no power adapter included, and that’s fine. Our cars have cigarette lighter to USB power converters in them, but it’s the cables we lose, lend, or misplace all the time. At just over 50 cents a piece, it’s ok if we give a couple away when someone is needing a cable.  I know that 9 may seem like overkill, but these cables aren’t just easily lost, they are easily damaged by catching them in a door or pulling at them at a bad angle. I like having a couple extra in each of our car’s glove compartments and a few in my desk drawer at home.

Have you run into anything that has such a wide range of price? Anyone try to sell you a single wooden pencil for $4, when they are $1 a dozen elsewhere?

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Sep 15

This week, skipping a political cartoon in favor of what some say “will do more to help the economy than QE3.” We’ll see. I’m still waiting on the 7″ iPad, was hoping it would be introduced this week.

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