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Apple lays early groundwork for major bond sale
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Apr 29, 2013, 03:50 PM
Apple is taking steps towards offering its first-ever bond sale, Reuters reports. A source tells the newswire agency that the company is making investor calls to Goldman Sachs and Deutsche Bank today, and has filed paperwork for a debt offering with the US Securities and Exchange Commission. The sale will go towards funding the company's plan to return $100 billion in cash to shareholders by 2015.

It's uncertain what currencies the debt may be issued in, and Apple has yet to comment on the Reuters piece. One research firm, CreditSights, suggests that Apple will probably have to issue between $15 billion and $20 billion of debt for the next three years.

Apple has never before sold any debt, but has little choice if it wants to go through with planned dividends and share buybacks. While the company has $145 billion in cash reserves, only $45 billion of that is located in the US. It could choose to repatriate the foreign cash, but the company has been unwilling to accept a 35 percent tax it would have to pay on the money. Apple and other companies have put pressure on politicians to enact a "tax holiday" which would make it cheaper to bring cash back to the US.
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Apr 29, 2013, 05:45 PM
I should do this too. Earn my money overseas, leave it there so I don't have to pay taxes on it, and jump through hoops to take out loans instead.

Our government is in debt further than any government in human history. Apple has become the most valuable company on the planet. And they don't want to pay their taxes. I've even heard we have historically low corporate taxes at 35% max. This is a sad situation.
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Apr 29, 2013, 06:22 PM
And why go into debt when you have $145 billion in cash? Because it's cheaper to pay the interest on the debt than to pay the income tax on the cash if you repatriate it from overseas, that's why.
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Apr 29, 2013, 08:39 PM
@reader50: the NOMINAL US corporate income tax rate is one of the HIGHEST in the world at 35%. However, there are deductions and such, so that the EFFECTIVE rate is much lower despite what corporate/conservative propagandists would like you to believe.

@lkrupp: it's also cheaper to pay interest on the debt than to pay the 3% dividend on the stock Apple will buy back. I'm sure Apple would be happy to leave that money overseas for as long as it takes until they get a better deal on the taxes on it.
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Apr 30, 2013, 12:43 AM
As climacs correctly points out, Apple would never, ever pay the 35 percent rate even if it decided to "re"patriate that cash tomorrow. Nor is Apple "not paying their taxes," lkrupp: Apple pays about a 24-25 percent tax rate on its US earnings, and is following the law as it exists. If you want to blame someone for this problem, blame Congress for creating the loophole in the first place, and the whole Wall Street thing for making it a requirement that Apple MUST try to pay as little tax as legally possible as a "fiduciary responsibility."
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