The framework for President Biden’s multi-trillion tax and spend budget currently calls for financing his massive social agenda in part by an excise tax on share repurchases. What was once just a bad idea is now a proposal that, if enacted, will hurt retirees and the economy.
Stock buybacks return a company’s surplus cash to shareholders, many of whom in turn use the capital to invest in young, growing firms thereby supporting the innovation cycles that boost the economy and job creation. Critics claim businesses use buybacks to reduce capital expenditures or shortchange employees. This is simply not true, as a company will only buy back its shares after it has met its planned commitments to employees and funded its annual research and development budgets. Buybacks allow investors to put their money to its best use. We need to drive capital into innovation and entrepreneurship now more than ever, to secure America’s position in a hypercompetitive environment.
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