Washington – Republican U.S. Senator Marco Rubio said on Wednesday he will soon introduce legislation that would tax corporate stock buybacks like dividends, aiming to spur business investment, create more jobs and boost wages.
Subscribe to our Daily Roundup Email
Corporate buybacks have been a political issue since early in 2018, when market data first pointed to an explosion of buyback programs as a result of President Donald Trump’s 2017 tax cuts.
Republican and Democratic lawmakers alike have criticized U.S. corporations for greatly favoring buybacks over growth-producing investments.
“Why are profits not being invested into company or new companies?” Rubio, of Florida, said in a series of messages on Twitter, advocating that there should be “No tax advantage for buybacks over dividends.”
He also tweeted that he will soon file a bill “making immediate expensing permanent & tax corporate buybacks same way as dividends.”
Stocks briefly pared gains after Rubio’s tweets.
Full data on buybacks is not yet available for 2018. But by mid-December, research from the firm TrimTabs had already noted a record $1 trillion in buyback announcements.
Rubio said would consider buybacks as a dividend for tax purposes and make permanent a temporary provision of the Trump tax overhaul that allows companies to immediately write off capital investments. Republicans touted immediate write-offs as a growth driver during the tax overhaul debate.
“Right now don’t have a ‘free market.’ We have tax code which engineers economy in favor of inflating prices of shares at the expense of future productivity & job creation,” Rubio tweeted.
But economic policymakers do not necessarily back the idea of changes in tax policy that target corporate decision-making.
With economic growth at a healthy pace, Cleveland Federal Reserve President Loretta Mester told reporters in Kentucky that “you want businesses to be able to make decisions like that on their own.”
Why should companies be taxes so much? Make one tax on earnings and that’s it. And we also have to pay tax on capital gains…enough! However, I do believe that in progressive tax on companies that make tons of money from the public, such as Apple, Pharmaceuticals, etc. But everything in moderation, to combine capitalism and socialism together, in a manner that benefits everyone.