Most of the arguments for and against the open letter to Apple’s (AAPL) board of directors issued Thursday by Bernstein Research’s Toni Sacconaghi have already been made. (See here and here.)

Sacconaghi’s polemics against Apple’s policy of holding on to its profits — rather than distributing them to its shareholders — tend to pop up like Sweet Williams every two years. In the 22 months between his Oct. 2008 call for a stock buyback and his July 2010 call for a buyback and dividend, Apple holdings in cash and marketable securities have grown from $24.5 billion to $46 billion — highest among all U.S. listed companies, as Sacconaghi is at pains to tell the board, and greater than the total market capitalization of all but 49 of the S&P 500 companies.

“In our conversations with shareholders,” Sacconaghi writes, “one common source of frustration — which is now bordering on exasperation — has been Apple’s burgeoning cash balance and the company’s unwillingness to return it to shareholders or discuss its vision for how the company plans to use it.”

Here’s what Sacconaghi — and most of the commentators — is missing. He writes as if Apple’s shareholders owned the company. While this is technically true, and it’s certainly the way investment advisers talk to their clients (see, for example, here), it’s clearly not the way Steve Jobs sees things.

Jobs, you will recall, was ousted from Apple and had to sell NeXT in part because as a young entrepreneur he paid insufficient attention to the bottom line. When he returned to Apple in 1997 the company was, according his recollection, three months away from bankruptcy. Since then he has treated Apple’s growing cash hoard like a starvation survivor treats food in the larder — something that could disappear at any time.

“We know if we need to acquire something — a piece of the puzzle to make something big and bold — we can write a check for it and not borrow a lot of money and put our whole company at risk,” Jobs said in February, the last time a shareholder asked him publicly why Apple didn’t pay dividends.

“The cash in the bank gives us tremendous security and flexibility.”

And he’s going to keep it that way, no matter how loudly the shareholders — or Toni Sacconaghi — complain.

ADDENDUM: Reader Dave Bernard, who knows a thing or two about taxes, adds this twist:

“One thing Sacconaghi doesn’t mention is that Apple couldn’t return the full $46 billion to shareholders even if it wanted.  Much of its cash (around 50%, per the latest 10-K) has come from overseas profits, which are often taxed at a rate less than the U.S. federal income tax rate.  If Apple were to repatriate overseas “earnings & profits” (tax technical phrase), it would have to pay U.S. tax on it.  Sacconaghi doesn’t seem to realize that doing this would cut into its cash hoard, increase the company’s effective tax rate and reduce current earnings.

Conceivably, Apple could owe $5 billion+ in cash for U.S. taxes if it were to bring back all the overseas cash to pay a dividend to shareholders.  That includes about $2.5 billion+ in cash taxes that have likely been accrued in earnings through the latest quarter (i.e., have already hit the company’s bottom line), and another $2.5 billion+ that could reduce earnings once Apple decides to bring it back.  It’s tough to pin down exact numbers using public filings, especially given the complexity of the tax code, but this is very likely in the ballpark.

What’s really interesting is that even as Apple’s earnings have risen 75%+ year over year during FY 2010, the company’s effective tax rate has been tracking lower this year than historically, which suggests Apple’s earnings in low tax jurisdictions outside the US have risen dramatically.  This means the cash and earnings costs of the kind of distributions that Sacconaghi is recommending are getting bigger, not smaller, at a pretty rapid pace.”

Bernard is the former vice president of taxes at Kimberly-Clark and past International President of the Tax Executives Institute.

[Follow Philip Elmer-DeWitt on Twitter @philiped]