How to Spend $2.8 Trillion of Corporate Surplus Cash?

According the newest estimates from Deloitte, there is an estimated $2.8 trillion of surplus corporate cash resting mostly in the U.S. In that surplus of cash, about a third of it is held by the largest corporations in the country. Many of these companies are located in the technology sector and have been building these nest eggs for quite some time.

Apple, Google and Microsoft, according to recent calculations, are holding about $258 billion of this surplus alone. With large corporations such as this, everyone is asking whether these companies will use some of this surplus cash to fund new projects and invest in other businesses or their own products.Many of these companies can be counted on to invest in other businesses and ventures simply because there is not enough room in their own businesses to reinvest. In the case of Facebook, that company went public in order to help give its employees incentives and to fund other investments in disparate markets. This is the case with other larger firms: they must find other avenues to spend their money so that they can have diversified portfolios.These large American firms are run more in the style of Japanese companies. The original founders give non-voting shares to outsiders to ensure that they can retain control. This allows the business to operate mostly for the benefit of the executives and the managers. In the Western world, most companies are built on equity shares that gives employees stock options but also put them at just as much risk as anyone else in the company.The only real issue for these companies in redistributing their cash is that they must deal with tax liability issues. Many of their dollars are held in overseas subsidiaries. That means that the money will incur a major tax liability once it is brought back to the State.

Rather, these companies are simply borrowing at low interest rates to ensure that payment will be easier down the line. Then, they can wait until they can strike a deal with politicians on tax liability that is more favorable.Will the  lawmakers change their policies or the money will be wisely reinvested?


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