In response to Joe Manchin's constant nattering about, "How do we pay for this," in regards to the stimulus packages, Ron Wyden and Sherrod Brown have proposed taxes on stock buybacks, which literally take money from the rich corrupt executives which Manchin actually represents:
Senate Democrats are coalescing around imposing a new tax on corporations that buy back their stocks to boost share prices and tightening rules around business partnerships that have allowed rich companies to shield profits from taxation.
The plans, likely to be included in the Senate’s far-reaching budget bill to offset some of its $3.5 trillion in social policy spending, show how far Democrats are willing to go in using tax policy to reshape business behavior. Democrats say the tax changes would bring in about $270 billion over 10 years, while pushing companies to invest more in their workers and their businesses.
Their emergence is also a sign that Democratic leaders are still looking for fresh ways to pay for the spending as other proposals run into rank-and-file opposition. Senator Jon Tester, Democrat of Montana, expressed opposition on Friday to a plan to tax inherited assets based on the gain in value from when those assets were initially purchased, rather than what they are worth at the time of death.
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Remember, Manchin and other Republicans (see what I did there) already killed increased funding for the IRS to go after rich people, but taxing stock buybacks is an idea will be phenomenally popular, and not it looks like the Dems will push a vote.
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Taxing buybacks may be more unifying. Cash-rich firms like Apple, JPMorgan Chase and Exxon spend billions of dollars each year to buy back, then retire, shares in their own companies, a practice that can help drive up the company’s stock price. That has been lucrative not only for shareholders but for corporate executives whose compensation is often tightly tied to their firm’s stock performance.
The heavy use of buybacks has come under withering criticism, especially since former President Donald J. Trump’s huge corporate tax cut was enacted in 2017.
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Senators Sherrod Brown, Democrat of Ohio, and Ron Wyden, Democrat of Oregon and the Finance Committee chairman, are proposing to tax the amount companies spend on such buybacks at 2 percent — enough, they say, to bring in revenue while making companies price in the financial risk and distortions that large-scale buybacks can pose to the economy.
The Finance Committee is also leaning toward changing the rules that large business partnerships have used to avoid taxation and evade Internal Revenue Service audits. Congress drafted the rules when partnerships were dominated by small businesses, like doctors’ offices. But increasingly, partnerships are large companies or subsidiaries of major corporations, arrayed in complex, overlapping configurations to allow their owners to shift profits, losses and deductions to evade taxes.
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“The constant theme running through our tax code is, paying taxes is mandatory for working people, but optional for wealthy investors and mega corporations. That’s especially true when it comes to pass-through businesses and partnerships, the preferred tax avoidance tools for those at the top,” Mr. Wyden said.
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Those changes, without any increase in tax rates, would raise $172 billion over 10 years, according to the Joint Committee on Taxation, Congress’s official scorekeeper on tax matters.
Though it would raise less revenue, about $100 billion, the tax on buybacks could be the more far-reaching measure. Over the past decade, Apple has been the king of the stock buyback, spending $423 billion to retire its stock. Microsoft, in a distant second place, spent nearly $129 billion.
Some Democrats have favored setting the tax so high that buybacks would make no economic sense. But Democratic tax aides said on Thursday that they were trying to balance the desire to curtail stock buybacks with the need to raise revenue. At the very least, a 2 percent tax on buybacks could encourage companies to use excess cash to pay higher dividends, which shareholders pay taxes on.
Also, it diverts money from investment in new technology and innovation.
Stock buybacks are mostly a way of stealing from a company and giving to upper management, though stock options, and they should be ended.
It's a precisely calculated f%$# you to Manchin, and IMHO, it is a well deserved one.
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