Photo: BlatantWorld via Flickr
Microsoft is keeping more than $51 billion in cash overseas to avoid high U.S. corporate taxes.Microsoft has long kept a lot of its cash overseas, mostly in Ireland. One of the reasons why Skype looked so attractive is the fact that it’s based in Europe, so Microsoft wouldn’t have to repatriate its cash and pay taxes on it.
So does Microsoft have to bring any of this cash home to “pay dividends and keep the lights on” as one analyst asked on today’s earnings call?
No. “We have plenty of cash. It’s not an issue.”
Microsoft and other tech companies are calling for a repatriation holiday, where the U.S. government would temporarily suspend taxes on bringing cash back from overseas. They claim that this would encourage them to invest more money at home, although the last time the government allowed this kind of tax holiday, in 2004, companies returned 92% of it to investors in the form of stock buybacks and dividend payments, according to the National Bureau of Economic Research.
(One could argue that those payments may also have helped the U.S. economy, but not in the same direct way as increased hiring and investment.)
Microsoft’s total cash and short-term securities now stand at $57 billion, up from $52 billion last quarter, making it the second-biggest cash hoarder in the tech business, behind only Apple, which has more than $65 billion if you add in long-term marketable securities.
Update: Microsoft actually had $45 billion of cash offshore at the end of July, much more than the $29 million that was stated by the New York Times article we linked to.
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