The cash stockpile of corporate America keeps getting bigger. U.S.-based companies held over $1.68 trillion last year in cash, up from 2014 slightly and over double the cash stockpile by companies in 2007, prior to the country’s Great Recession.
The list of companies was published by Moody’s Investor Service. At the top of the list were Apple, Microsoft, Google, Cisco and Oracle. Those five had the most amongst 1,000 companies that were included in this listing. Financial companies did not appear in the listing.
Combined, the top 5 tech companies are holding over $504 billion equal to 30% of the total held by all the corporations.
Of the $1.6 trillion total, close to 72% of the cash is being held in accounts overseas, which means it is currently untaxed.
That is the part in which presidential candidates and current Washington lawmakers are infuriated with.
Corporations in the U.S. are deciding to maintain earnings overseas as a way to avoid the payment of high corporate taxes when the money is repatriated.
The taxes could be as much as 40%. As multinational companies create more overseas jobs, the issue becomes a hot topic on the campaign trail of 2016.
The trend of maintaining cash overseas is not going to go away any time soon said Moody’s. The service said it is expecting that cash balances overseas will continue their growth unless the tax laws in the U.S. are changed as a way to encouraged the companies to bring that money home.
Apple had over $200 billion in 2015 that was overseas, which was up from only $31 billion during 2010. It keeps part of that cash in Ireland and other tax havens.
Tim Cook the Apple CEO spoke about the problem during a 60 Minutes episode in December of 2015. He called Congresses criticism nothing more than political crap.
Cook actually said he would like to bring all the money back to the U.S. but it would cost the company 40% and that means it is not the thing to do at this point.
All the cash overseas is a sign that businesses are not using cash to make investments for the future, whether it is for funding their new projects or for facilities and buildings. In 2015, capital expenditures were down after going up for five straight years.