Telegraph Writer Calls for Middle Class Revolution

[alfred russel]

I imagine that there is an implicit statement somewhere that when you issue bonds, you're using the proceeds to invest in business rather than channel them directly into the pockets of owners.

I doubt it.  Apple recently borrowed 12 billion to finance a stock buy back.

True, although admittedly this trend is considered largely harmful.

Can't speak to Apple in this particular case, but it is very common for US companies to borrow for dividends or stock buy backs because repatriating overseas earnings will have significant tax costs. They have lots of cash overseas, but still need to borrow in the US to avoid the tax man.

There are reasons to consider that harmful, but not the ones being discussed in this thread.

[Martinus]

I imagine that there is an implicit statement somewhere that when you issue bonds, you're using the proceeds to invest in business rather than channel them directly into the pockets of owners.

I doubt it.  Apple recently borrowed 12 billion to finance a stock buy back.

True, although admittedly this trend is considered largely harmful.

Can't speak to Apple in this particular case, but it is very common for US companies to borrow for dividends or stock buy backs because repatriating overseas earnings will have significant tax costs. They have lots of cash overseas, but still need to borrow in the US to avoid the tax man.

There are reasons to consider that harmful, but not the ones being discussed in this thread.

Sorry. This was more of an off-hand comment on my part. The practice is overused and as such bad for business - was not suggesting it is fraudulent or that it should be banned.

[Barrister]

I imagine that there is an implicit statement somewhere that when you issue bonds, you're using the proceeds to invest in business rather than channel them directly into the pockets of owners.

I doubt it.  Apple recently borrowed 12 billion to finance a stock buy back.

True, although admittedly this trend is considered largely harmful.

Can't speak to Apple in this particular case, but it is very common for US companies to borrow for dividends or stock buy backs because repatriating overseas earnings will have significant tax costs. They have lots of cash overseas, but still need to borrow in the US to avoid the tax man.

There are reasons to consider that harmful, but not the ones being discussed in this thread.

Well you just pointed out precisely the reason it's bad - because it's done for purely tax purposes.  Apple has retained overseas earnings that they can't or won't spend because doing so will trigger huge taxes.

[Martinus]

Tax structuring is not bad per se.