A bill that would impose a 1 percent excise tax on the repurchase of stock by publicly traded companies passed the U.S. Senate this week.
The Stock Buyback Accountability Act, sponsored by U.S. Sen. Ron Wyden (D-OR), was passed as part of the Inflation Reduction Act.
Wyden, the chair of the Senate Finance Committee, said the legislation seeks to incentivize big corporations to invest in their workers rather than investors and shareholders via stock buybacks.
“Rather than investing in their workers, mega-corporations used the windfall from Republicans’ 2017 tax cuts to juice their stock prices and reward their wealthiest investors and their executives through massive stock buybacks,” Wyden said. “Even as millions of families struggled through the pandemic, corporate stock buybacks once again hit all-time highs. Stock buybacks are currently heavily favored by the tax code, despite their skewed benefits for the very top and potential for insider game-playing. My proposal with Senator (Sherrod) Brown simply ends this preferential treatment and encourages mega-corporations to invest in their workers.”
Stock buybacks are just that, cases where public companies repurchase their own shares on the market, usually in down markets when prices are lower. Wyden said they are used by public companies to juice their stock prices and reward investors. Corporate stock buybacks set at an all-time high in 2018, then broke that record in 2021.