It’s both, actually.
They don’t disappear as such, they just circulate. Sometimes, they come to rest in a nice safe, usually warm place like the Virgin Islands or the Bahamas for a while.
Seriously, if you want an amusing few hours follow the trail of say Apple, Starbucks or IKEA’s revenues generated in the UK or Germany and see where they go.
The most basic level of this stuff is for example the following:
Big Corp. has the right to make a widget. They don’t actually make the widget themselves however. They set themselves up as a company in a nice low tax jurisdiction. They set up a bunch of subsidiaries in countries where they actually want to make the widget.
They grant a licence to these companies which are legally separate entities. They charge for the licence. They may or may not lend money to the subsidiary - loans they charge interest on.
The revenues generated by the subsidiary which may be substantial, coincidentally just happen to be about, if not slightly less than, the total money due to the licence holder.
So UK Co. does not make a profit even though it is generating vast revenue. All the money flows back to Big Corp. who banks it in their nice account in whichever tax haven happens to be ‘in’ this year.
A lot of people do make money off it along the way but at no point do billions get distributed to shareholders. At least not yet. Theoretically you’re right, something will be done with the money at some point but until then it just sits there, piling up in great lovely virtual heaps.
If your company is generating hundreds of billions of dollars, you can happily afford to leave most of that sitting around. There is really nothing useful you can do with it anyway. The amounts are just too vast.
Warren Buffet’s shareholders letters are quite interesting in that respect. He’s been saying for several years now that it is getting harder and harder for them to find anything worthwhile to do with the vast amounts of cash BH’s insurance businesses (and the others of course) throw up.
I suspect that may be part of the reason for the move into healthcare.
(Part about how to transfer profits into non-taxable companies in tax havens): yes, I know about that. Apple profits in Germany and France go to Irland and the Netherlands.
(Part about that money just sitting in a tax haven): I am pretty sure you are mistaken here. The people who control the funds did not get to the position they are by just letting money sit around. I am pretty sure they know how to put it to generate another round of profits for them.
Anyway, my point was: there are people who have the signature on that big pile of cash. These are the people whom we need to expose instead of letting them hide behind the fiction of “artificial life forms”. There are no “artificial life forms”, just people who built a giant smoke screen for them to hide.
Unfortunately, they don’t appear to - which is why there is a lot of lobbying about reducing US tax on such income. They want to get it in their personal wallets but they don’t want to pay the tax…
I agree.
As I said the ‘companies are artificial life-forms’ meme started rather more than tongue-in-cheek than it has become.
See here:
http://www.antipope.org/charlie/blog-static/2010/12/invaders-from-mars.html
and here (the sections ‘Old, slow AI’ and 'What do AIs want?:
http://www.antipope.org/charlie/blog-static/2018/01/dude-you-broke-the-future.html#more
It is still a useful metaphor in that it points out that people organised into companies tend to do things that benefit the company rather than individual human beings (or even groups of human beings) and it highlights the absurdity of arguing that companies are ‘people’ in any sense similar to how human beings are ‘people’.
It also means that Apple can afford to employ their own cleaners on a real living wage instead of outsourcing.
They might already do that (and if they do then it’s great), but big businesses usually don’t.
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