Idle corporate cash piles up

By David Cay Johnston
July 16, 2012

IRS data suggests that, globally, U.S. nonfinancial companies hold at least three times more cash and other liquid assets than the Federal Reserve reports, idle money that could be creating jobs, funding dividends or even paying a stiff federal penalty tax for hoarding corporate cash.

The Fed’s latest Flow of Funds report showed that U.S. nonfinancial companies held $1.7 trillion in liquid assets at the end of March. But newly released IRS figures show that in 2009 these companies held $4.8 trillion in liquid assets, which equals $5.1 trillion in today’s dollars, triple the Fed figure.

Why the huge gap?

The Fed gets its data from the IRS, but only measures the flow of funds in the domestic economy. The IRS reports the worldwide holdings of U.S. companies, which I think is the more revealing measure.

From the companies’ point of view, it makes perfect sense these days to hoard cash.

First, Congress lets overseas profits accumulate untaxed, so long as offshore subsidiaries own the cash. Second, companies have a hard time putting cash to work because fewer jobs and lower wages mean less demand for products and services. Third, a thick pile of cash gives risk-averse CEOs a nice cushion if the economy worsens.

Given the enduring hard times, you might think that corporations have used up their cash since 2009. But real pretax corporate profits have soared, from less than $1.5 trillion in 2009 to $1.9 trillion in 2010 and almost $2 trillion in 2011, data from the federal Bureau of Economic Analysis shows.

That is nearly $1 trillion of increased profits over two years, while actual taxes paid rose less than a tenth as much, BEA reports show. Dividends, wages and capital expenditures all grew less than profits, while undistributed profits rose. The result: more cash.

Bigger profits are good news, but it would have been better news had those increased profits been put to work, not laid off in accounts paying modest interest. Hoarding corporate cash in bank accounts, Treasuries and tax-exempt bonds poses a serious threat to the economy, as Congress recognized when it enacted the corporate income tax in 1909.

Let’s get some perspective on these gigantic figures, all measured in today’s dollars.

The 2009 cash reported to the IRS equaled America’s entire economic output that year from New Year’s Day through May Day.

This cash pool came to $16,700 for every man, woman and child in the United States, a 53 percent real increase from 2004, my calculations from IRS data show.

Looked at yet another way, these companies had 11.3 percent of their assets in cash, or enough to pay their 2009 corporate income tax bills, which amounted to $148 billion, more than 34 times over.

In short, U.S. companies hold vastly more cash than is needed to finance their operations.

For investors, companies holding 11.3 percent of their assets in cash lowers returns. Did you buy shares of American Widget so executives could park profits in savings accounts?

For workers, idle cash means idle hands and minds. With one in five Americans unemployed or underemployed, and real median wages in 2010 back down to the level of 1999, this is no time for capital to go on an extended holiday.

For taxpayers, untaxed profits subtly reduce corporate tax burdens and increase the tax burden on individuals. Because taxes owed on offshore profits are not adjusted for inflation, they depreciate at the rate of inflation. That means a double whammy for taxpayers as government pays interest on money it borrows while its accounts receivable from multinational corporations lose value.

Since the income tax system began, Congress has authorized a tax on excessive accumulated earnings to limit damage to the Treasury — and the economy — when companies hold far more cash than their operations require. Without the accumulated earnings tax, corporations can become bloated tax shelters instead of engines of growth.

A business holding more cash than its operations reasonably require can be hit with a 15 percent levy under Section 531 of the Internal Revenue Code, on top of the 35 percent corporate income tax. The Tax Court even devised a mechanical test in 1965 for how much is too much.

Historically the IRS has levied only privately owned firms or publicly traded companies with few shareholders. But Internal Revenue Code Section 531 applies to all corporations. President Ronald Reagan signed Section 532 (c), which made that explicit, though with an exception for untaxed offshore profits.

After reviewing decades of literature on these code sections, I cannot fathom any rational basis for giving multinational companies an exception to the cash hoarding rules, which discriminates against purely domestic firms.

Some of the multinational corporations say they will bring home what could be more than a trillion dollars ifCongress will give them an 85 percent tax discount. The companies frame this as creating jobs. But as I showed in an earlier column, unless there are strict rules, the money can be used to buy back company stock while destroying jobs.

Want to motivate companies to put some of those trillions of dollars of idle cash to work creating jobs, paying dividends or sharing the burden of taxes? Call 1-202-224-3121 and tell your senator or representative you want Section 531 vigorously enforced – now – and the offshore loophole closed immediately.

39 comments

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Tax on cash is right. Another way to boost economies all over the world and to prevent the build up of cash is to raise wages.  Where will the money come from? Johnston shows it is already in the cash register. Time to
impose a maximum highest pay/lowest pay ratio worldwide.

Posted by ma820 | Report as abusive

What better way to slow down an economy than build up cash reserves. Of course the cash should be taxed. Another way to boost the economies of the world is to raise wages. Where will the money come from? Johnston shows is in the cash register! Time for a high-pay/low-pay maximum ratio worldwide.

Posted by ma820 | Report as abusive

Simple, raise the income tax on dividends to what President Obama suggests and then also allow corporations to deduct dividends as a business expense.

Corporations then have an incentive to not keep excess cash on their balance sheets and retired or other people living off of dividend income are benefited while the rich pay a high rate and amount of income tax. Win-win, except for the wealthiest.

Posted by johnzbesko | Report as abusive

Looks like these large companies are doing fine. Except instead of re-investing their money here, taking care of their employees and building up the economy (the original promise of the Bush tax cuts) they’re instead just Baining the employees who made them the money. Not the best long-term plan, but then again….. who needs long-term plans when you have a Cayman Islands bank account full of cash. Good times.

You get what you vote for.

Posted by AlkalineState | Report as abusive

These corporations are wisely holding back money because of expenses they expect to have to pay in the next few years. They are expecting bad times because of the anti-business climate of this administration. Corporations would rather be like Ford, which survived the 2008 collapse because of a large cash balance, rather than like GM, which should have gone bankrupt due to lack of cash. The GM stockholders lost their assets when the government took over the company. Corporate officers have a duty to protect the shareholders from that kind of event.

Posted by stevedebi | Report as abusive

stevedebi, if the current administration is so ‘anti-business,’ then how were these companies able to thrive to the point that they could accumulate record piles of cash?

What ever big bad thing Obama has supposedly been doing to screw big business….. I think you can rest safe. Did you look at the cash charts above? The conservative line is getting more and more silly. Obama is not anti-business and the numbers above prove that fact.

Posted by AlkalineState | Report as abusive

Dividends.

Posted by borisjimbo | Report as abusive

The public has been trained well in ‘market speak’.

The idea that corporations are hoarding cash because one president or the other is anti-business is just typical, ideological, market fundamentalism. Pro-business propaganda that points to a boogeyman using manipulated facts, if any at all. Mostly just talking points and slogans. You’ll never hear about the plight of the worker, only the corporate sorrows of having record profits during a time of economic downturn. Next you’ll hear that banks don’t need regulation, in fact any regulation or any tax is bad.

Why should a CEO make a ridiculous x-times the average worker’s salary? Because he or she maximized profit by any means necessary? Can there be no ethics and morals when it comes to the profit motive?

Posted by TheUSofA | Report as abusive

You need to keep in mind that part of companies’ liquid assets are the commercial paper and bonds they buy from each other. These are often described as “cash equivalents” in balance sheets but they are not “idle cash.” They are investments by companies in other companies.

In Flow of Funds accounts, assets and liabilities are reported on a net basis for an entire sector. So if you are looking at non-financial corporations, commercial paper issued by one NFC and bought by another nets to zero and therefore doesn’t show up at all. This explains some of the difference in numbers that you are seeing.

I would also caution against treating any kind of “cash equivalent” as “idle”. For example holdings of Treasurys or munis are cautious investments, not idle cash. Companies can’t all sell out of these at once unless there is some other very big buyer.

I recommend you go over this with Reuters journalists who have expertise in this area and can help you sort out the facts.

Posted by tom_the_bear | Report as abusive

while some of those loopholes need to be indeed restricted or eliminated, there is an interesting issue that could help small business to invest locally domestically:

It is over 25 years that the first $ 50K earned by a Corporation is taxed at 15% Federal (plus the state rate if applicable), then every dollar above that is taxed more. It is time to inflation adjust this figure to $ 100K. Inflation did its course and $ 50K are not that much anymore.

This will help small business to invest in their backyard, as they do not have an offshore shell to milk from.

Posted by robb1 | Report as abusive

” Why the huge gap?”

Because, David, our government is basically set to favor the wealthy, and increasingly so.

The wealthy control the corporations, and hence, the federal government, in such a way as to assure their continued power over those who are not wealthy, over those who work for an income.

The wealthy use any and all means to continue their powerful grip on society. The greatest areas of the focus of the wealthy in maintaining power has probably been the various religious and patriotic, flag-waving manipulations, used to gain votes for candidates who will then accept the money of corporations to do all manner of things within the federal government to favor those who really profit from the corporatations. All the while the wealthy boardroom inhabitants are claiming that they are helping to create jobs, helping to preserve personal freedom (freedom of the wealthy, of course, and oppression of the working class), blah-blah-blah. Are not those claims mostly hollow, if not entirely?

Those who are elected with all of the above means then appoint Supreme Court justices who make pronouncements declaring such things as “corporations are people”, allowing even more obscene amounts of money put into electing the politicians of the wealthy. Meanwhile, we have children and adults going hungry, living in cars or under bridges, the continual erosion of the manufacturing base of our economy being sent to other countries, in the name of “being competitive” but in reality for the even greater wealth of the already wealthy.

So it goes, but you already know all of the simple things above, you just need for someone else to say it, no?

Posted by taxcorps2 | Report as abusive

All we have to do is look in our personal lives at how corporations treat us, their own customers, to see what the real motivation is of those who inhabit the board rooms.

Posted by taxcorps2 | Report as abusive

In these very dire fiscal times for both the US and some European countries, the author, probably well intentioned, is sadly making the rather common mistake in Europe of analyzing large international corporation based on the geographic locations of headquarters (or nationality of the senior management).

Most of the cash balances the author is identifying are in foreign countries, most likely generated in these foreign countries and the analysis that this cash should be taxed in the US or used to increase US salaries is not that different from standard 19th century colonialism where profits in foreign countries, in a different context, were repatriated to the “home country” ass dividends or wages.

Most corporations have in fact already remarked that the US salaries are very likely to be already the highest inside the corporation (irrespective of remarks on CEO pay etc) and investment opportunities are very likely to be better in many non-US (or many “not home country”) locations.

More in line with reality would be an analysis which looks at the cash balances of the local medium size companies in the US (in Europe). Most likely the result would be dramatically lower. (they are in Europe where typically larger corporations have 85% of their business outside their historical home country)

Posted by NinjadeTokyo | Report as abusive

Another great column Mr. Johnston!

My guess is companies are waiting until November to see if a President Romney (no stranger to parking assets abroad) and a Republican Congress will reward them with a major tax holiday to repatriate the cash. The thing is, most of that cash will come back anyway. The only question is when and whether or not it will be taxed at the typical corporate rate.

In the mean time the rest of us suffer. Investors have to suck it up and accept lower returns. Small businesses in the US have to suck it up and accept lower demand for their goods and services. Workers have to suck it up and wait for jobs – maybe – to return. In short we all suck it up while they wait for a windfall.

While I’m on a rant, if organizations like the National Federation of Independent Businesses really cared about their members they’d stop shilling for Republicans, stop siding with the US Chamber and its big company patrons and vote Dem.

Posted by BSharkey | Report as abusive

Small business has very little in common with big business. A small business does not have global supply chains and markets they can manipulate. A small business does not have the capital to ‘donate’ 20 million dollars to a political candidate and be re-paid tenfold with pork money (Think Halliburton, Goldman Sachs). The GOP has been intentionally blurring the line between big business and small business for quite some time, hoping we’ll think it’s all just ‘business.’

But small is not big. And the two have very little in common. It’s really that simple.

Posted by AlkalineState | Report as abusive

Just another tax and spend idea. Steal from the corporations to give money to the losers. If government refuses to create a business friendly environment, then business has a duty to keep their assets out of government reach.

The facts no one wants to read.

Learn to think for yourself.

Censorship is evil.

Posted by ALLSOLUTIONS | Report as abusive

Corporations don’t have to actually create jobs (or they would have already), all they have to do is claim they will create jobs when taxes are lowered. Then, of course, there is the “Robin Hood” argument that ALLSOLUTIONS uses. That one still makes me laugh.

Stupidity is evil.

Posted by JL4 | Report as abusive

The main issues before CEOs in corporations are market, competition and profit. These mean survival of the corporarion to them. The core mission of their job is to maximize profits and responsible to the shareholders.

Therefore they ought to invest with the corporation’s cash for profit maximization if the market is suitable for this sort of ventures. Letting piles of cash sitting there is the last alternative they seek, particularly in this economic climate.

Any substantial investment and business ventures carried out by corporations will certainly gear the demands up for small businesses such as sub-letting, retails and personal services etc.

Posted by Kailim | Report as abusive

It’s a capital strike, just like a labor strike — politically motivated, intended to damage the economy. Public exasperation born of desperation will damage the Democratic Party and the President’s re-election chances.

Mrs. Clinton often complained about a right-wing conspiracy against her and her husband. She wasn’t far off the mark.

Posted by hogsmile | Report as abusive

Corporations also sport one of the highest debt loads in history, so this cash ‘hoard’ is well balanced by a huge mountain of debt.
Besides, the idea that ‘cash hoarding’ is negative for the economy is Keynesian clap-trap. It has no basis in reality, as economic activity is not funded by ‘money’ but by real savings and real capital. If cash is ‘hoarded’ all that happens is that the monetary unit’s value doesn’t decline as quickly as it otherwise would (it would rise in a free market, but in our socialistic dispensation the central banks keep printing ever more of the stuff).

Posted by PaterTenebrarum | Report as abusive

Just another greed and envy based arguement by socialist/communist/collectivists who want to change the rules after the companies (owned by real people, many of which are union pensioners mind you)paid taxes and the cash is their property. Oh but only if we could steal more of it by forcing them to “disgorge” it then things would be much better. What a delusional dream by a bunch of thieves to correct their decades of bullshit laws and lack of economic freedom.

Posted by JP007 | Report as abusive

‘Economic Freedom’ is the sanitized way to describe the ‘Economic Fraud’ of the last 15 years.

There is an overwhelming & corrupt financial power in our world, and nothing short of an all out armed revolution can change this.

Posted by GMavros | Report as abusive

U.S. capacity utilization has been declining for several years. During 2009 U.S. capacity utilization declined below 70% to approximately 64% in the manufacturing line of business. Utilization this low suggests that some (perhaps many) corporations are investigating downsizing options (i.e., selling capital) to maintain acceptable Rates of Return (ROR). Low capacity utilization is indicative of corporations conducting insufficient business to support their size, not corporations stressed by high taxes.

During previous decades the IRS enforced IRS Code 531 and stockholders sometimes sued corporations for deriving too much corporate income from money invested in Treasury instruments, money funds, etc. rather than deriving income from the corporate charter’s stated organization and business purpose. Some CEO’s lost their jobs over these law suits.

Nowadays the big political money machines use misdirection to redirect the public’s attention from corporate America’s historically large horde of cash by declaring that corporate America is overtaxed which has no basis in fact. The misdirection is working. Corporate executives and directors are reaping huge rewards. The average CEO’s pay that used to average 15 times the average employee’s wage since the time of Plato until the 1980′s are now receiving 500 times as much and more. Directors who used to get reimbursed their travel expenses for attending quarterly meetings are now being paid one million dollars and more annually to attend quarterly meetings.

Mr. Johnston’s education and range of experience qualify him for seats on boards of directors in several lines of business where he could collect millions of dollars for himself. The fact that Mr. Johnston chooses to use his time and effort to inform the general public of politicians, corporate executives and wealthy citizens (and non-citizens) with sinister goals shows a man with strong moral conviction. I only know Mr. Johnston through his articles that I started reading a few months ago. I must admit I’m grateful to Mr. Johnston for collecting and providing this useful information rather than participating in the greed. Thank you.

Posted by VoveoPacis | Report as abusive

Maybe these companies could give more money to Romney. He’s been going through it a record rate….. and he’s still losing.

Kind of like buying expensive air time for Sears. In the end….. it’s still just Sears. 30 years behind the times and not worth re-visiting.

Posted by AlkalineState | Report as abusive

Wall Street business practices continue to undermine confidence in the capital markets that is key to job creation and economic growth.

Are federal banking and market regulators part of the problem, or part of the solution?

Here’s your chance to tell Congress to step up oversight of all federal banking and market regulators to enforce fair and equitable capital markets:
http://www.change.org/petitions/u-s-sena te-banking-and-u-s-house-financial-servi ces-committees-use-technology-to-provide -oversight-of-u-s-banking-and-market-reg ulators?share_id=HTpDoOQNJgpe=d2e

Posted by zEthics | Report as abusive

Wall Street business practices continue to undermine confidence in the capital markets that is key to job creation and economic growth.

Are federal banking and market regulators part of the problem, or part of the solution?

Here’s your chance to tell Congress to step up oversight of all federal banking and market regulators to enforce fair and equitable capital markets:
http://www.change.org/petitions/u-s-sena te-banking-and-u-s-house-financial-servi ces-committees-use-technology-to-provide -oversight-of-u-s-banking-and-market-reg ulators?share_id=HTpDoOQNJgpe=d2e

Posted by zEthics | Report as abusive

I am one who believes only citizens of this nation should pay taxes. Once people have paid taxes on their money they can do whatever they like with it. Investing in corporations is one way.

The corporation was created to benefit society and various laws enforce that. Clearly they shouldn’t be allowed to simply hoard money, violating their corporate charter or the tax code or the spirit of the corporate entity itself.

Perhaps there should be a gov’t action, once they are fully engorged (like ticks full of blood), which would force them to disgorge a certain portion of their idle/non-performing cash as dividends, so gov’t can then tax that at the individual plus penalty rate. Maybe the ‘threat’ of that would encourage them to utilize the money properly.

Oh, and dividends should be taxed as any other income. Once you do away with a corporate rate there’s no longer any justification for halfing the tax between the corporation and the individual. Instead of 15% + 20% the individual should pay the entire tax rate 35%. Add the penalty for forcible disgorgement and it’s up to 50%. Note: I’m not dealing with exemptions in this discussion.

It should become quite clear corporations must put the cash to work according to their charter and for the good of their shareholders and the nation which allows them to exist.

If Johnston’s numbers are right, and I have no reason to doubt him, it’s time for the president to make it clear he won’t stand for hoarding when the nation is in difficulties such as the high unemployment.

Posted by MarkHathaway | Report as abusive

I don’t see any problem, necessarily, with corporations accumulating cash. But it does undermine their credibility (pretty much erases it in fact) regarding their complaint that they can’t make any money under Obama – that he’s somehow strangling them with his pinko anti-business ways. They’re clearly doing fine. The above numbers prove it.

Posted by AlkalineState | Report as abusive

Curious that corporate-owned foreign holdings are tax deferred when individual foreign holdings risk being subject (though avoidable enough with tax planning) to the Passive Foreign Investment Company tax– a retrospective taxation of unrealized capital gains (an interest charge for each year of ownership is added to capital gains tax) at ordinary income tax rates, with no step up basis for heirs. Heck, it’d be worthwhile to replace the corporate income tax by taxing all capital gains like this.

Until then, the excess retained earnings tax should be amped up. Congress should add foreign holdings to tax base and start taxing (or un-taxing) C Corps like REITs; no corporate income taxes due so long as they kick out at least 90% of their earnings as dividends (which shareholders pay taxes on at ordinary rates).

Posted by beowu1f | Report as abusive

The business world is ruthless. Has any CEO not fulfilled the interests of the board and the major shareholders, he/she will be out of job forthwith.

I like to reiterate that they will not let cash piling up in corporations if they have the chance to develope, further develope and invest in new ventures basing upon the conditions of market, competition and profit and loss projection etc. Their core mission is to maximize profit for the corporations.

Posted by Kailim | Report as abusive

Large corporation CEOs are really apolitical and amoral. Their two key drivers are shareholder value and executive compensation. That’s it and nothing else. There is no less patriotic group in America than corporate CEOs. They would NEVER invest their cash hordes to help the country because that would run counter to those two key drivers. A lot of CEOs wear an American flag as a lapel pin but, trust me, that is just theater, just for show. As a retired telecommunications executive I know exactly what I am talking about here.

Posted by explorer08 | Report as abusive

Cash rich corporations living with balance sheets in the black versus the developed countries’ governments all living deep in the red seems exactly opposite the Chinese way of keeping the central government very wealthy and capable of investing wherever it cares to focus. It is obvious the Chinese can turn their attention to any kind of infrastructure improvements and business expansion they care to undertake.

I am almost convinced that the Chinese way is better in spite of their less liberal civil rights record. That can improve in China as the level of education rises overall in that society and as the people establish their own enlargement of scale and autonomy. But at least they are working and building the cities and towns of China in what appears to be a more modern and sensible way than this country did or ever can again. I fear we built our bed and will die in it no matter how inappropriate it is for changing global economic and environmental conditions.

BTW – A life in the corporate world does not guarantee the freedom of the individual. In fact – the prerogatives of the corporation trump many issues of civil rights and can make it harder to exercise those civil rights. The corporation has the ability to cut off any employees who do not value the corporate culture or it’s priorities. I am not talking about personal experience. More the sorts of case we call “whistle blowers”.

I have had very little time employed with corporate life and have spent most of my life as a small businessperson. But while working for one I found that books I was reading were being noticed and talked about while I was away from my desk. But no one ever talked to me about them while I was present. The social atmosphere was very little different than High school or, for that matter, China.

I won’t be at all surprised when China becomes the bastion of civil rights and individual freedoms and good standards of living while the western liberal societies all sink into bankruptcy and stagnation to become the 21st century’s feudal regimes. I am sure it can happen.

I take explore08 at his word. I am sure he is correct.

Posted by paintcan | Report as abusive

All this data serves to show is that the record cash piles these companies held going into the recession weren’t enough, and that the CEOs have now learned some lessons in building businesses sufficiently resilient to such crisis occurring again in future.

The recessions that we have endured in the past few years have led to record numbers of companies failing, record numbers of layoffs and historic levels of shareholder losses. Now that the markets are no longer pouring blood, it seems reasonable for shareholders to take stock, keep their options open (cash=options), and play wait and see.

If shareholders thought it unwise to leave such cash ‘sitting around’, they would be most vocal about claiming it back. Instead shareholders consider a safe low interest account to be a wiser investment than putting the business at more risk in what remains a very nasty environment. In essence, they have done what they are expected to do and what they should do.

What has always been clear is that government finances worldwide have been proven to be grossly inadequate going into 2007. Governments should be at the peak of their surpluses going into a recession, ready with their warchests to moderate the full blown impact of a nasty recession when it does occur. Instead worldwide they spent it and landed in a recession with the biggest fiscal hangover the world has ever seen.

Companies for their part took huge losses and had a lot of internal bloodletting after they screwed up, and shareholders took much of that hit. But when it comes to the public finances, politicians are blaming companies again? It figures. What a different recession it would have been had the US and other major governments built a tidy sovereign wealth fund before 2007.

Posted by barfle | Report as abusive

A@barfle: and that is exactly what the Republican Party has not wanted to happen because they want the government barefoot and prone, and would very much prefer that all those who depend on it drop dead as long as they get theirs. Am I too unkind? The biggest pigs at the Federal trough are always the rich and the well funded. Everyone else needs the government as the most reliable and usually most legally accountable and disinterested party available for long term concern for the general welfare. Most buisnesses – and especially the ever changing place names of the major international corporations – seem to be fly by night outfits, actually, however lush their corporate quarters. Every decade or so they seem to have name changes and identity crisis and rack up huge debts in merger and acquisition costs. It keeps people in money and I appreciate the value of negative numbers on a balance sheet.

I personally will never trust the honesty or integrity of a single business in this country again. I am too old and too poor to listen to the junk ads and business come-ons that fuel the doddering and fraudulent economy of this not so great nation and getting smaller all the time while it’s self inflating and, very frequently, bought with advertising dollars, puffs everything from politics to pampers. But when it puffs war it is a crime against humanity. It is murder for hire. It is paid for propaganda for the sake of converting some man’s blood into another man’s treasure. They preach a work ethic but don’t really mean it. They know that talk is for the suckers and anyone who can, builds a big pile of cash, anyway they can, and sits of it. They then spend inordinately amounts of time and money congratulating themselves on their bravery and hard work. People never tire of building gilded railings around their lives.

The major companies can’t seem to make sufficient employment so the government has to step in for everything they don’t want to support. That is the undertone of Mr. Johnson’s article. And that is the government we have had since the Great Depression. The rich as Truman Capote once said – “are the most frightened people on earth, because they cannot imagine living without large amounts of money”. Not an exact quote. They are the greatest addicts in a country of addicts.

I do appreciate the balance of powers but that appreciation only works when one is not suffering too noticeably. Otherwise it is a lesson in self reliance or toughing in out by people who frequently don’t meet the conditions of their own rhetoric either. I am not sure that anyone alive and/or writing in these pages actually does? And I many be too surly to appreciate it when I see it.

I think the ACA is an act of desperation and it tied the country – sick and well – to professional sharks. They should liken the Obama administration to Diocletian – the emperor who invented serfdom to save the last scraps of the dying empire. I am poor but I am also afraid to be rich. It is also so much harder to get off the ground.

I suppose debt and solvency are like bellows that fan the fires of the economy or starve them of oxygen. Just don’t get caught in the draft – in or out – of those damned bellows. The bellows opening is infested with bacteria that write CDOs and other very flimsy come-ons, or scams like Facebook that claim that ten percent of outstanding shares are a reliable indication of the value of the rest. I’m not a financial expert by any means but that is something I’d have rather not begun to understand: how the US economy can puff it’s own GDP with such flimsy vehicles of “wealth creation”. I hate the way it robs the bodies own efforts – of any consequence or value.

Does the US truly believe that derivative instruments are in any way something to believe, accept, respect, or have confidence in? And I don’t hoard gold – I am too poor. The money may all be an abstraction and intelligent people understand that to their bones, but the 99% may actually believe it means something tangible. 99% can be wrong. Lincoln thought one could fool all of the people some of the time – and that’s everyone. Some of the time may be enough to doom ships and states.

It’s enough to send one trolling through Ecclesiastes. But it’s too depressing.

Posted by paintcan | Report as abusive

This is why I sold 2/3 of my GE stock. They have over $100B in cash and equivalents, but are still not raising their dividend. We retired folks relied on generous GE dividends in the past, but after 2008 dividends plummeted from 0.31 to 0.10. It’s back to 0.17, but with all that cash they should be closer to 0.25 per share.

Posted by Timelessman | Report as abusive

with the new law passed by congress this year, companies are getting wealthy by not paying into employee pensions

Posted by running | Report as abusive

It’s time to tax these corporations as Ronald Reagan confirmed we should. But it won’t happen in an election year.

The idea of raising the income tax on dividends but allowing it as a business expense to stimulate the disbursement of the cash reserves is not likely to stimulate our economy as much as taxing it and letting the government give it to the States where it will be spent on job creating activities. While much of the dividend income does go to retired folks, most of it is heald by the wealthy. Neither of these groups is suffering as badly as the young and middle-class unemployed and while it would be a bit of a stimulous it wont create as many jobs as State payments to teachers or road workers.

@NinjadeTokyo raises a good point that most funds are on foreign shores and are likely to be invested there. But investments are done with after tax dollars subject to deductions and exemptions, so the other purpose of the law is to stimulate US job growth. Also, it is understood that much of the growth of this cash is to park funds in a tax free account. The reason for this is that there really isn’t a safe place to invest this money. So it sits there unused until the economy gets better. This is a job killer. I say tax the exess cash and put it to use paying teachers and building the infrastructure of tomorrow.

I like @hogsmiles conspiracy theory. It may also be true for the Koch Brothers.

@PeterTenebraum, even if your debt load statement is true, Corporate debt is very cheap and manageable. given the extraordinary low rates, now is the time to go into debt. Your Keynesian statement is also false. The frequency with which money trades hands is a multiple that increases the money supply and is closely watched by monitarists. But, if you’re afraid of future inflationary pressures, then the best thing to do is to give the horded money to the Government so they don’t have to print so much and the corporations don’t have so much to spend when times get better.

Posted by LEEDAP | Report as abusive

Is it time to create incentives for businesses to invest the idle cash back into the business. (Remember the IRS did not have enough staff to enforce the foreign accounts rule hence the 2009 Amnesty Program.)
Lets create something like the 50-50-50 Plan for business capital investments e.g. a short term change to business depreciation rules to encourage businesses to buy stuff.

The change has three phases. In the first phase 50% of the cost of the item can be depreciated in the first year. In the second phase the balance is depreciated over 50% of the standard time period. In the third phase any equipment sold for more than the book value only has to treat 50% of the excess payment as profit.

Posted by RocqueNRoll | Report as abusive

The string of comments here are truly stunning. Many people here articulate that the government should take a company’s money because they have built a reserve. And the people on this website say that is fair and legitimate, because they are not helping someone else, like themselves. WOW! Talk about hypocrasy. As I read the posts, people feel enabled to take someone else’s possession, because they are down on their luck, or they know someone down on their luck, or maybe they feel their idea of social responsibility out weighs the fact that we are supposed to live in a FREE country, where people have rights. Rights to make their own decisions, like what to do with their own money. Face it people, the money is not yours! You want a say about what corporation does with its money, then become a shareholder. Don’t sit on the side line, trying legislate your control over other people/money. I guarantee that you would not appreciate someone telling you, to give your money to someone else. I run a small company. We are in the middle of an IRS audit. The IRS’ big concern is we have too much money in the bank. We have 5 to 6 months of revenue. To us, it is not enough. We would like a cushion to survive a downturn, and not have to layoff all of our people – but the dunderheads like the idiot who wrote the article above, would have you write your congressman to tax our reserve. We would like an opportunity to grow. We would like an opportunity to hire more skilled resources, and take a larger step forward. To do this, we would like a small safety factor. To us 6 months is a very short time in a business cycle. Clearly to people like Dunderhead Johnston we must be JP Morgan Chase. We are, as described by both parties, the fabric of America with less than 30 employees. Smart people realize that the more you pound small businesses down, the more you regulate them, the less chance that they will grow or survive. People stop asking for other people’s money, property, ideas, etc. Look at yourself, and find out why you were put on earth. Make your own way, most of us did!

Posted by HelpPeople | Report as abusive