High hopes for tech groups’ overseas cash pilesTax holiday proposed by Trump is aimed at boosting jobs but will probably fuel dealsInside by Richard Waters
On the list of problems for 2017, what to do with more than half a trillion dollars of spare cash is the kind of conundrum most chief executives would love to face.That is the amount of money that just five tech companies — Apple, Microsoft, Alphabet, Cisco and Oracle — will have swilling around in their overseas coffers by the end of this year, according to rating agency Moody’s. Add in the rest of the tech sector, and the figure is probably more like $650bn.
Thanks to a tax holiday proposed by president-elect Donald Trump, much of that money could soon head back to the US — though with strings attached.After all the promises made during the election campaign, many of Mr Trump’s supporters have one thing on their mind: making sure that money supports new jobs. So the incoming president will be eager to avoid the kind of headlines that followed a 2004 tax holiday on offshore tax, when $312bn was repatriated.
Democratic staff in the Senate estimated that the 15 companies that benefited the most from that earlier windfall, far from creating employment, actually went on to cut more than 20,000 jobs. One reason: high cash balances often fuel mergers and acquisitions, which in turn are usually predicated on greater cost efficiencies.