Top Democrats Unveil 2% Tax on Share Buybacks in Effort to Fund Biden’s Spending Agenda
Senior Democrats are proposing a new 2% tax on share buybacks by US corporations, in an effort to create new revenue streams for Biden’s ambitious spending initiatives.
On Friday, Senate banking committee chair Sherrod Brown and Senate finance committee chair Ron Wyden, two of the top Democrats overlooking the financial sector, unveiled a new bill that would force US publicly traded companies and US subsidiaries of international companies to pay a 2% tax on the value of repurchased shares.
“Even as millions of families struggled through the pandemic, corporate stock buybacks are once again nearing all-time highs. Stock buybacks are currently heavily favoured by the tax code, despite their skewed benefits for the very top and potential for insider game-playing,” Wyden was quoted as saying by the Financial Times.
“Our bill simply ends this preferential treatment and encourages mega-corporations to invest in their workers.” the senator added. The latest bill comes as the Biden administration ramps up efforts to pass the $3.5 trillion spending plan, which would allocate investments towards education, health care, child care, and climate change.
One of the main hurdles that Democrats have faced as of recent, isa lack of revenue to help fund the ambitious plan. The Biden administration has already proposed raising the corporate income tax rate, the capital gains tax rate, as well as the income tax rate for some of the country’s wealthiest individuals. Moreover, in addition to potentially implementing a buyback tax, the Democrats are also mulling a crackdown on the preferential tax treatment of partnerships.
According to a draft document released by the Senate finance committee on Thursday, tax loopholes that allow companies and investors to structure their businesses as partnerships in order to forego paying taxes during inconvenient times, could potentially come to an end. “The increase in the use of partnerships and other pass-through entities has severely depleted corporate revenues and has resulted in a more regressive tax system,” read the document, which was also seen by the Financial Times.
Information for this briefing was found via the Financial Times. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
