Just five U.S.-based tech firms — Apple, Microsoft, Google, Cisco Systems and Oracle — had cash reserves of $430.3 billion at the end of 2014, the vast majority of which were held overseas, according to a new report from Moody’s Investors Service.
Over the past five years, the tech sector at large accounted for 56% of the total increase in corporate cash. Apple, with at least $178 billion to its name, holds more greenbacks than many entire industries.
It’s a trend that is likely to accelerate.
“Despite stronger returns of capital to shareholders, we expect the concentration of cash in the technology sector to grind higher over the next year,” Moody’s analysts wrote in the report.
That’s because most of the money is held overseas. Instead of bringing it back to the U.S., many firms choose to keep cash earned abroad beyond the reach of Uncle Sam, and his 35% tax rate on repatriated cash.
Roughly 90% of the total cash held by Apple, Microsoft, Cisco and Oracle is overseas. Google, meanwhile, keeps 60% of its $64 billion in cash abroad. As long as the companies don’t bring that money home and reinvest it, they don’t have to pay U.S. tax on it.
The issue has long flummoxed policymakers in Washington, many of whom are inclined to offer the companies a one-time tax break in an effort to entice them to bring the money home.
For now, Moody’s said progress on the issue is unlikely.
“At this stage in the political cycle and given strong differences on both sides of the aisle in Washington, we do not expect tax reform that would prompt overseas cash repatriation,” the analysts wrote.
Here’s a breakdown of the $430 billion in cash:
Apple (Tech30): $178 billion – 89% overseas,
Microsoft (Tech30): $90.2 billion – 91% overseas,
Google (): $64.4 billion – 60% overseas
Cisco (Tech30): $53 billion – 94% overseas,
Oracle (Tech30): $44.7 billion – 90% overseas,