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Liberals HATE stock buybacks.
It’s another way “greedy corporations” hurt their employees.
Microsoft (NASDAQ: MSFT) just announced a new $60 billion stock buyback. And a prominent liberal economist was quick to attack.
Robert Reich was the former Labor Secretary under President Clinton. He also served as an advisor to Presidents Ford and Carter.
Now retired…
Reich spends his retirement years attacking big corporations for paying dividends and buying back stock.
His primary argument is that corporations should NOT share their profits with shareholders. Instead, they should use this money to pay workers more or to hire more workers.
It’s a crazy argument.
You’d expect that an economist with degrees from Dartmouth, Yale and Oxford would understand capitalism works.
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Corporations are owned by their shareholders.
This includes regular folks like us. We may own a few shares of Microsoft in our brokerage account. Or we may own it indirectly through an ETF that tracks the S&P 500 – where it’s 6.5% of the index.
The profits of a company belong to the rightful owners of the company (aka “the shareholders.”)
The company’s board has an obligation to act in the best interest of those shareholders.
Now, the board could choose to implement a profit-sharing plan for employees… provide 10% annual raises… invest in new equipment… or make acquisitions or expand in new markets.
Yet they can also choose to return a portion of the profits to the shareholders – through a stock buyback or dividend.
Capitalism is under attack.
In 2022 President Biden initiated a 1% tax on stock buybacks – as part of his “Inflation Reduction Act.”
Now Vice President Kamala Harris wants to expand this with a 4% tax on stock buybacks.
This effectively skims 4% of the profits from a company’s stock buyback.
It’s not a tax on corporations. It’s a tax on their shareholders – including you and me.
Perhaps it’s time for Washington to control spending – rather than continuing to raise taxes on regular Americans.
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