View or download a PDF of the factsheet here. Taxing Stock Buybacks Strengthens the Real Economy and Raises Nearly $200B for Critical Programs Increasing the tax on corporate stock buybacks encourages investments in the realeconomy, discourages excessive executive compensation that widens economic inequality,and raises funds to protect healthcare, nutrition, and other programs that help workingfamilies. Stock
The first in our WHAT TO KNOW ABOUT THE TAX FIGHT Hill briefing series. Panelists and legislative champions discuss how taxing CEO pay and stock buybacks is the ultimate pro-worker tax policy. Note: Q&A has been edited out to allow participant candor.
AFREF and 23 signatories submitted a comment letter calling on the Treasury Department and the IRS to finalize a rule implementing the 1% stock buybacks excise tax with strong anti-avoidance provisions.
Americans for Financial Reform Education Fund (AFREF) led a letter with 13 additional signatories urging the SEC to repropose the stock buybacks disclosure rule to provide investors with information about this widespread yet opaque practice. This important rule was struck down by the Fifth Circuit Court of Appeals following a challenge by the Chamber of Commerce.
The Securities and Exchange Commission (SEC) today finalized a plan to bring long-overdue transparency to the practice of companies buying back their own stock. However, the final rule weakened key aspects of the initial proposal.
AFREF and the Institute for Policy Studies, Global Economy Project led a comment letter to the Office of Management and Budget (OMB) about its uniform guidance, which sets the boundaries around the types of strings states and localities are allowed to attach when they disburse federal funds. This comment letter argues state and local governments should be allowed to give preferential treatment to bidders that commit to make productive investments in their companies and refrain from stock buybacks and excessive executive compensation.
Washington, D.C. – Commerce Department guidelines finalized today are a critical step in ensuring that public investment in chip makers is used for productive ends instead of squandered on stock buybacks.
Washington, D.C. – The announcement that Chevron will spend $75 billion on stock buybacks underscores the urgency of reinforcing a measure Congress created last year to penalize companies that engage in a financial practice that amplifies rampant wealth inequality, and in this case boosts the bottom line of a climate-harming industry.
Schumer uttered those words as the Senate was on the brink of passing the Inflation Reduction Act—the compromise reconciliation bill that resulted from prolonged, heated negotiations amongst Democrats. The version that will go to President Biden includes something brand-new in U.S. economic policy: a one percent excise tax on stock buybacks, which reached an astonishing $882 billion last year.
AFREF led a letter with thirteen organizational signatories commenting in support of a rule proposed by the Securities and Exchange Commission that would significantly increase the transparency of stock buybacks. A central component of the proposed rule is daily disclosures of stock buybacks. (Current disclosure requirements are only quarterly.) In the comment letter, we commend the SEC on the proposed rule and make recommendations to further strengthen protections against market manipulation and insider trading that we believe would improve long-term financial stability and growth.
Stock buybacks exacerbate the racial wealth gap, worsen economic inequality, and divert resources from the real economy which harms workers. Taxing buybacks would raise revenue and discourage companies from putting highly-paid executives ahead of the broader economy.
Take on Wall Street/AFR, the International Brotherhood of Teamsters, Communications Workers of America, AFL-CIO, and United for Respect hosted a briefing for Hill staffers on September 23, 2021, to explain why Wall Street needs an excise tax on stock buybacks and why now is the time to pass one. The event touched on the history
Today, 19 groups sent a petition to the SEC urging the Commission to initiate a rulemaking to revise Rule 10b-18 to ban stock buybacks and protect workers.
Our report found that CEOs with preliminary CHIPS agreements are sitting on company stock holdings worth more than $2.7 billion ($306 million on average). In other words, these executives are positioned to reap huge personal windfalls from share price pops related to continued buyback spending. President Biden has spoken out repeatedly against wasteful stock buybacks and his economic agenda centers on an industrial policy to create good jobs and long-term prosperity, particularly for communities and workers who’ve been left behind.
“The SEC must stand behind the need to have basic transparency around stock buybacks,” Natalia Renta, senior policy counsel for corporate governance and power at the group, said in a statement.
The Securities and Exchange Commission should re-propose its rule on disclosures of stock buybacks as soon as possible now that the unreasonably tight deadline for a court-mandated revision of the rule has passed. The Fifth Circuit Court of Appeals, alleging “defects” in a rule designed to bring transparency to stock buybacks, gave the SEC 30 days to revise the rule – an impossibly short time frame it then refused to extend upon the SEC’s request. The ruling came in response to a lawsuit by the Chamber of Commerce.
“The money that is being siphoned off from earnings to increase executive bonuses doesn’t just make wealthy insiders wealthier,” said Heather Slavkin Corzo, senior fellow at Americans for Financial Reform. “It is money that could have been used to invest in making the business more competitive and pay workers living wages.”
The groups urged the agency to abandon old rules that govern stock buybacks in light of their rampant abuse by corporate America since their enactment in 1982. Last year, the massive tax cut passed by Congress and signed into law by President Trump gave companies war chests of unprecedented size to boost share prices through stock buybacks.
The report from the Institute for Policy Studies and the Americans for Financial Reform Education Fund, Maximizing the Benefits of the CHIPS Program, analyzes the distribution of the $39 billion in subsidies for semiconductor manufacturing under the 2022 CHIPS and Science Act. It also examines the Biden administration’s initial steps to stop taxpayer money from going to share buybacks by granting preferential treatment to firms that agree to forgo all stock buybacks for five years.
AFREF, in partnership with the Institute for Policy Studies, has released a report on the 2022 CHIPS and Science Act’s $39 billion in subsidies for semiconductor manufacturing, and specifically on the Biden administration’s decision to grant preferential treatment in the awarding of these subsidies to firms that agree to forgo all stock buybacks for five years.
