About this: 5 US companies — Apple, Microsoft, Google, Pfizer, and Cisco — are sitting on $439 billion in overseas cash

The FT reports that just “five US companies are hoarding nearly half a trillion dollars as the country’s tax code and a tepid global economy deter businesses from spending their overseas cash piles. Apple, Microsoft, Google, Pfizer and Cisco are sitting on $439bn of cash — accounting for more than a quarter of the total $1.73tn being held by US groups, according to Moody’s Investor Services. The top 50 together hold almost $1.1tn, with the iPhone maker alone accounting for more than a 10th of the cash reserves.”

Ding, ding, ding. Yet another reason for tax reform to bring some of that dough home — for investment, for dividends, buybacks, to pay for needed public investment. Along the same lines, a WSJ commentary by Thomas Duesterberg and Donald Norman note the “chronic weakness” in US capital investment. In 2014, real GDP was 9% above prerecession levels vs. 4% for gross private invesment. And private investment net of depreciation $524 billion in 2013 versus $860 billion in 2006.  Duesterberg and Norman think link weak capital investment to the continuing productivity slowdown — growing just 1.5% annually between 2005 and 2014. Why is behind this trend? They point to the high US corporate tax rate but also the growing regulatory burden:

For example, a 2012 study by NERA Economic Consulting notes that the number of major regulations in the manufacturing sector has grown at the compound annual rate of 7.6% since 1998, compared with only 2.2% average annual growth in GDP. The negative impact of this regulation on investment is suggested by a number of comparative international indexes. For example, the U.S. is typically in the top five in the World Economic Forum’s annual “Global Competitiveness Report.” But in the category for “burden of government regulation” the latest report ranks the U.S. 82nd of 144.

Also recall that  a big part of the secular stagnation argument, at least as put forward by economist Larry Summers, is that there’s both a paucity of high-return investments for business and too little demand to prompt action. As I wrote earlier this year: “Weaker-than-expected investment this year would give weight to the sec-stag thesis, while a business spending spree would ague the opposite.”

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