Their Reasons:
Bloink: The new 1% stock buyback tax in the Inflation Reduction Act simply does not go far enough. Major corporations have recently announced stock buyback plans valued at $40 billion and $75 billion. The 1% excise tax on these buybacks obviously is not working to discourage them, so the logical next step would be to impose a harsher penalty that the largest corporations in America would actually feel.
Byrnes: We should not be focused on discouraging stock buybacks in the first place. Americans are struggling with slumping portfolios across the board in today's inflation-driven economy. Stock buybacks can give those portfolios the boost they need in this challenging time — if the company at issue can afford to execute the buyback, there's no reason we should penalize them for it.
Bloink: We need to move further toward encouraging major corporations to invest in providing better pay, paid family leave and other valuable benefits — rather than allowing them to continue these manipulative tactics that are designed to artificially inflate stock value. Allowing corporations to execute these buybacks without penalty also allows the corporation to get away with not paying dividends — which, of course, harms ordinary Americans in the long run.
Byrnes: Stock buybacks are completely legal. This latest proposal to increase the tax on stock buybacks punishes successful taxpayers and corporations for taking advantage of completely legitimate strategies. I also don't think that this new tax will have any impact on whether or not corporations choose to engage in stock buybacks. It'll also have very little impact on investor valuation.
Bloink: The bottom line is that the buyback tax is one more step toward forcing the wealthiest CEOs and business owners to pay their fair share when it comes to taxes. It also serves to encourage businesses to put their funds to work for the best use possible — growing their business and supporting hardworking American employees.
Byrnes: Major corporations who drive this economy should be able to decide how to use their own capital. Discouraging stock buybacks certainly is not going to create a benefit for average American investors who will benefit from higher share prices. In the end, it could cause CEOs and other highly paid executives to demand even higher salaries in today's already challenging labor market because they're no longer able to benefit from the stock buyback strategy.
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