User:Mrcst6/sandbox

Limit or tax stock buybacks
"The purported policy goals of the Excise Tax are to raise revenue1 for other legislative initiatives, encourage reinvestment by public companies of funds that otherwise might be earmarked for a buyback, and to curb stock buybacks, which proponents of the tax argue inappropriately enrich corporate executives and wealthy shareholders and enable tax avoidance." This is a way for ciompanys to make back more money on their own stocks, but with this, they added the !5 tax to it all. "The new 1% excise tax on corporate stock buybacks — a late addition to President Joe Biden’s sweeping tax, health and climate package — adds a new levy to the controversial practice." There is a new idea coming in when going to buy stocks; this 1% tax is on covered corporations on the market value of their own stock. But there is many mixed opinions on how it will effecting the investing world. "When a profitable public company has excess cash, it can purchase shares of its own stock on the public market or make an offer to shareholders, known as a stock buyback or share repurchase." This means that if a company has a lot of leftover money, they can purchase their own stocks off the market from or make an offer to a shareholder to purchse the stock. This is a way of getting cash back to the shareholder, stock buybacks will boost earnings and make the company's financial service look a lot better than it is. Shareholders think that because it is a buyback, that they will have little to no taxes paid, this is why they prefer this over dividends. "Since buybacks cause stock prices to rise, investors ultimately must pay taxes on the capital gains they accumulate because of the buyback." With dividens, you must pay taxes on them when you get them. But with buybacks, they do not have to pay taxes on them until they sell their shares. Despite all of this, there is a still lot of mixed reviews on this idea, one of the main things is because the stock price could fall. "Spending cash on shares can reduce the amount of cash on hand for other investments or emergency situations." Compamies are too focused on spending their money on buybacks that they will not have anymore money for the important things that they need. All in all, buybacks have a lot of negative effects that could possibly outweigh the positive.