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Tax Havens: ACE Limited (ACE), XL Group plc (XL), Yahoo! Inc. (YHOO)

In order to return some of that cash to shareholders via dividends and share buybacks, the company has taken on debt. This works with interest rates so low, since the tax bill of repatriating cash would be much higher than the single digit interest rates Microsoft pays. No harm done, but the company’s financial position is, in the end, weaker than it might otherwise be.

On a bigger level, Microsoft, and many others, are more likely to expand overseas than in the United States if their money is outside our boarders. For example, a new research facility with high-paying jobs could be built in California or the Netherlands. If Google’s money is in the Netherlands, guess who has a better chance of getting those high-paying jobs.

Public Black Eye, Shareholder Value

As a shareholder, seeing a company cut its tax rate is a good thing. Imagine how happy you would be if you could take home a greater percentage of your own paycheck. If your investments lower their taxes, your share of their profits gets bigger. You can’t blame them, and, perhaps, should cheer them on. As for Mickelson, when the flap blows over he’ll probably be moving closer to Woods.


The article Tax Havens originally appeared on and is written by Reuben Gregg Brewer.

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