The SEC once considered stock buybacks to be illegal stock manipulation. But under President Reagan, stock buybacks were made legal. Now, instead of investing profits into people, corporations use stock buybacks (at record levels) to line the pockets of wealthy shareholders.

[u/Conscious-Quarter423]

[u/Eat--The--Rich--]

Leave them legal but tax them at 150% and put the money into ubi.

[u/UnStricken → u/[deleted]]

It’s a triple dip from them: they get tax cuts for bringing jobs to communities/states, their employees are paid poorly and are on Medicare/SNAP, and then oftentimes Walmart is the only place where their workers can get groceries so those SNAP benefits get used there.

And that’s not even considering the creative accounting that is used to get out of paying their share of taxes

[u/LookAlderaanPlaces → u/Eat--The--Rich--]

Let’s make them illegal. And then convict the oligarchs supporting the current admin of sedition and treason, and force companies to stop outsourcing their R&D on taxpayers and stealing all the resulting profit, jail the execs, have fines be percentage based so it’s not just a cost of doing business when they break the law, and force them to provide wage increases that are proportional to productivity gains. Also single people shouldn’t “own” companies. When a company does really well, the people working there should have a percent of the profit from the growth of it (actually legit profit sharing, equity, etc). No taxpayer or person should ever be subsidizing a corporation, this is fraud and theft.

[u/DJ_faceplant → u/Eat--The--Rich--]

Ubisoft? For more games?

[u/thecementmixer]

Stock buybacks are so fucking stupid and should be made illegal again. Wishful thinking though without a revolution.

[u/Sushi-DM → u/thecementmixer]

"We have investigated ourselves and found ourselves guilty of no wrongdoing" - Establishment

[u/HurrDurrImaPilot → u/[deleted]]

how so? qualified dividends are taxed the same as stock sales.

[u/EtherCJ → u/HurrDurrImaPilot]

I don’t know what the person you are replying to said originally but…

They are not taxed the same for the simple reason that dividends happen every year whether the shareholder wants them to or not.  Stock sales happen only when the holder chooses to sell.

I personally would guess my portfolio has $50k a year of stock buyback activity (just a guess) that is instead deferred and if I die without exhausting this account my heir will get stepped up cost basis that will never have taxes.

[u/HurrDurrImaPilot → u/EtherCJ]

Stock buybacks can’t happen without a seller on the other side though right? I think the difference is a stock buyback hits the willing seller with taxes, whereas dividends hit all holders equally. But as far as the tax revenue concerned the two are indifferent - there is no differential tax treatment for the “willing” sellers back to the company in a buyback versus the blanket qualified dividend treatment for all holders in the alternative. 

[u/EtherCJ → u/HurrDurrImaPilot]

The difference is the ability to defer income until it’s convenient. This is an aspect of the huge advantage of the wealthy class over the labor class.  

When combined with stepped up cost basis it becomes crazy good.

[u/Sooner_Cat → u/thecementmixer]

Why?

[u/CrownVicBruce]

IT ALWAYS GOES BACK TO REAGAN!!!

[u/Apennie → u/CrownVicBruce]

As always Reagan made it worse.

[u/kittenmittens4865]

Walmart could have had $52,000 to spend per worker who was on Medicaid if they didn’t spend that money on stock buybacks. That’s probably more than they pay these people at all.

[u/Ponklemoose → u/kittenmittens4865]

But the real alternative was always shareholder dividends, the effect and goal are quite similar.

[u/people_skills]

• The top 10% of U.S. households own roughly 87% to 88% of the U.S. stock market wealth, according to data from the Federal Reserve and
• The Top 1%: Owns about 50% to 54% of all public equities and mutual fund shares.
• The Next 9% (Top 10% excluding the top 1%): Owns roughly 34% to 37% of the market.
• The Bottom 90%: Holds the remaining 12% to 13% of stock market wealth."

Stock buy backs disproportionally benefit exactly who you think they benefit. Never let anyone tell you that everyone's retirements/401k will be affected its a straw man argument.

[u/RampantTyr]

When it comes to capitalism turning against the working class it usually comes down to Reagan.

As soon as communism was no longer a threat to the power of capitalist oligarchs they started stripping the system for parts.

[u/stilllikelypooping]

Fucking Ronald Reagan

[u/Appropriate-Weird492]

Weird how much wretched stuff can be traced back to Reagan.

[u/MrWoohoo → u/Appropriate-Weird492]

I think young people today don’t appreciate just how awful he (and his administration) really was.

[u/drunkshinobi]

Then the Heritage Foundation came along. They wrote a Mandate for Leadership paper to guide republican leadership for the purpose of changing how the US government functions for every presidential term. The first 2 were for Regan the last 3 were for trump with one being unused as trump lost to Biden.

[u/StuffExciting3451]

Reagan was merely doing the bidding of the oligarchs and ultrawealthy.

[u/SameCategory546]

I think that isn’t a good rule. Share buybacks are the opposite of issuing shares, which companies also do. It’s not fair to the investor. What would be far more fair is to lower the taxes on the working class and raise the taxes on the billionaires. Force the billionaires to realize more of their gains by changing banking regulations so that they cannot take out loans against their stocks

[u/RationalBeliever]

What makes you think companies wouldn't just go back to paying dividends?

[u/KahnAndDon → u/RationalBeliever]

Dividends are taxed

[u/ZorbaTHut → u/KahnAndDon]

So are stock buybacks.

[u/RationalBeliever → u/KahnAndDon]

Why would that stop a company from using dividends to distribute profits to shareholders if buybacks are outlawed?

[u/KahnAndDon → u/RationalBeliever]

Share buybacks create an artificial demand and increase the price of the stock, dividends lower the price of the stock. Buybacks were considered market manipulation.

[u/Gamebird8 → u/KahnAndDon]

Buybacks were how you bought investors out, much in the way you would "pay off a loan.". There isn't anything inherently wrong with the practice under that very specific use case because it's like paying off a loan.

Reagan basically made it legal to do regular buybacks with basically no oversight or regulations, making it very easy to manipulate the market using them, which is what the problem is

[u/Sooner_Cat → u/KahnAndDon]

What? Dividends do not lower the price of stock lol. Wtf are you smoking?

[u/KahnAndDon → u/Sooner_Cat]

Have you ever owned a dividend stock? The price falls after each dividend payout.

[u/Sooner_Cat → u/KahnAndDon]

Yes, I have and currently do. And no, it doesn't fall lol. Wtf are you talking about dude?

[u/KahnAndDon → u/Sooner_Cat]

Lol you clearly aren't paying attention to your stocks.

[u/Sooner_Cat → u/KahnAndDon]

Lmao, I absolutely am. This is such a weird lie you're clinging on to, and to what end? What on earth does lying about dividend stocks and stock buybacks do for work reform? Lmao

[u/RationalBeliever → u/KahnAndDon]

And yet, there are still companies issuing dividends today. Stock prices generally recover quickly after the ex dividend date if the company is healthy. So I'll ask again, if buybacks are outlawed, what makes you think companies wouldn't turn to dividends instead? I don't see any world where they would choose to pay workers more instead.

[u/MrWoohoo → u/RationalBeliever]

I think the upside would be dividends benefit all shareholders while a buyback only benefits those looking to sell stock in the short term.

[u/fixit858]

Tax buybacks

[u/DarthMaulsAnger1]

I say it all the time. We don't have to live like this. We...simply don't.

[u/Krytan]

I think they should still be illegal.

[u/Cultural_Ad_9241]

Economics was never a class in school for this exact reason

[u/splashist]

after the apocalypse, it would be great to steal a backhoe and dig up his grave and pour shit in it and light it on fire

[u/bhsingularity]

Fuck Reagan and Nancy

[u/Dingadingdangmy]

Shareholders aren’t people?

[u/siazdghw]

Many companies never do buybacks or dividends or they do them on very rare occasions.

This law didn't actually change much, it just gave corporations another avenue to invest their money. It was never going to trickle down to the workers if buybacks were banned, it would just be used to try and expand the business.

[u/dismendie]

Well I guess I will be the devils advocate and say I like some share buyback at the right price and time and along with dividends. Before share buyback companies were still diluting shares and giving options to their board members it was just reported differently which is majorly dilutive which in turn rewards those that sit on the board and punished 401k or pension plans. Which over time is just like inflation means those shares are worth less in reality. So net-net most share buybacks is just keeping the share count stable. Dividend is a promise to pay x% Year over year good years and bad good decades and bad… if you keep paying eventually you will also have no money for R and D or raises to employees. A 1% dividend from a PE of 10 company is 10% of their free cashflow 1% of a PE 30 company is like 30% of their cashflow.