Trump's Corporate Tax Cuts & Why Stock Buy Backs Shoud Be Illegal

[Biff_Poindexter]

It’s Time to Ban Stock Buybacks

Even though prominent republican Senators admitted that the Trump tax cuts would result in corporations using that to buy back stocks, not hire people or wage raises, they still pushed the tax cut thru, increasing the debt at hyper speed ---and as these corporations continue pumping cash into stock repurchase programs -- at the expense of investing in employees and society on the whole -- it is worth noting that the practice has only been legal for the past few decades.

When did it become legal? Well -- during the Reagan years -- before then stock buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation once they became legal it opened the floodgates for companies to start repurchasing their stock en masse -- why did Reagan want this? Because corporations told him to.

What were the pros behind making this legal? They lead to a rise in stock prices, which can have a marginally positive effect on consumer confidence and consumption. And shareholders are, obviously, people — albeit not the majority of them. Again, about 80 percent of all stocks are owned by the richest 10 percent of Americans.

What are the cons behind making this legal? Stock buybacks worsen wealth inequality. Stock buybacks have been a prime mode of both concentrating income among the richest households and eroding middle-class employment opportunities.

So I will keep this simple and sweet -- if you claim to be the for the middle class and working class Americans -- then I want to ask 3 questions:

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??


2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

3. Would you oppose standing up to corporations when it comes to stock manipulation simply because you think it would make libs mad??

 

[Toddsterpatriot]

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??

Yeah baby!! Higher stock prices are awesome!

2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

If they buy back, for instance, 10% of their outstanding shares, the remaining 90% are more valuable.
The remaining 90% have the same earnings spread over a smaller number of shares and therefore, more earnings per share. That's not manipulation, that's math.

3. Would you oppose standing up to corporations when it comes to stock manipulation

I oppose improper usage of the term manipulation.

 

[task0778]

The first surprise: A big slice of the US stock market isn’t American at all. Foreigners own about 35% of US stocks by value—and their ownership grew considerably over the last few decades.

Some of these foreign shareholders are wealthy individuals, others are corporations or investment funds. They own far more of our stock market than ordinary Americans do.

About half of US households have zero exposure to the stock market: no stocks, no mutual funds, no 401(k), no IRA, nothing.

According to research by New York University economist Edward Wolff, some 84% of the stocks owned by Americans belong to the wealthiest 10% of households.

Subtract that 10%, and subtract the 50% who own no stocks, the remaining 40% of Americans split about 15% of the stock market. For many, their investment is negligible—maybe a few hundred dollars in an old 401(k). Others have a big part of their net worth tied up in stocks. Maybe you’re in that group.

But a solid majority of the American population feels no direct impact from stock market performance.


Here's the thing: some of those US households with zero exposure to the stock market probably have an indirect one through their pension fund, which the last I checked was north of $20 Trillion dollars. That Trillion with a "T", and I haven't found the ration of pension funds to individual and corporate investors yet. These days, you don't need to invest thousands of dollars to buy a share of stock unless it's something like Berkshire Hathaway. Whose fault is it if you're spending money on a new car and taking vacations somewhere and living beyond your means to the extent that you can't invest in your own future? Even if it's only a few hundred bucks for the first few years of your income producing years, it'll grow over time and especially if you start adding more to it as you make more money. And if you're not making more money by the time you cross over 25 heading for 30, well whose fault is that?

I'll speak my mind on this: some of the blame falls on the Democratic Party and asshats that promise free this and free that, $15 hr min wage and the rest. Who's gonna bust ass if the Dems are in effect telling you don't have to? You tell me, is that a good thing for most people, especially young people? I don't think so.

Next post: some info about share buybacks. Newsflash, it ain't just to screw the middle and lower class to make it harder to join the party. Bullshit, you can buy ETF shares quite cheaply if you wanted to.

 

[task0778]

From Investopedia:

Reasons for Buybacks
Since companies raise equity capital through the sale of common and preferred shares, it may seem counter-intuitive that a business might choose to give that money back. However, there are numerous reasons why it may be beneficial to a company to repurchase its shares, including ownership consolidation, undervaluation, and boosting its key financial ratios.

Unused Cash Is Costly
Each share of common stock represents a small stake in the ownership of the issuing company, including the right to vote on company policy and financial decisions. If a business has a managing owner and one million shareholders, it actually has 1,000,001 owners. Companies issue shares to raise equity capital to fund expansion, but if there are no potential growth opportunities in sight, holding on to all that unused equity funding means sharing ownership for no good reason.

Businesses that have expanded to dominate their industries, for example, may find that there is little more growth to be had. With so little headroom left to grow into, carrying large amounts of equity capital on the balance sheet becomes more of a burden than a blessing.

Shareholders demand returns on their investments in the form of dividends which is a cost of equity – so the business is essentially paying for the privilege of accessing funds it isn't using. Buying back some or all of the outstanding shares can be a simple way to pay off investors and reduce the overall cost of capital. For this reason, Walt Disney (DIS) reduced its number of outstanding shares in the market by buying back 73.8 million shares, collectively valued at $7.5 billion, back in 2016.

Downside of Buybacks
A stock buyback affects a company's credit rating if it has to borrow money to repurchase the shares. Many companies to finance stock buybacks because the loan interest is tax-deductible. However, debt obligations drain cash reserves, which are frequently needed when economic winds shift against a company. For this reason, credit reporting agencies view such-financed stock buybacks in a negative light: They do not see boosting EPS or capitalizing on undervalued shares as good justification for taking on debt. A downgrade in credit rating often follows such a maneuver.

Effect on the Economy
Despite the above, buybacks can be good for a company's economics. How about the economy as a whole? Stock buybacks can have a mildly positive effect on the economy overall. They tend to have a much more direct and positive effect on the financial economy, as they lead to rising stock prices. But in many ways, the financial economy feeds into the real economy and vice versa. Research has shown that increases in the stock market have an ameliorative effect on consumer confidence, consumption and major purchases, a phenomenon dubbed "the wealth effect."

Another way improvements in the financial economy impact the real economy is through lower borrowing costs for corporations. In turn, these corporations are more likely to expand operations or spend on research and development. These activities lead to increased hiring and incomes. For individuals, improvements in the household balance sheet enhance chances they leverage up to borrow to buy a house or start a business.

Why would a company buy back its own shares?

 

[BlackFlag]

It’s Time to Ban Stock Buybacks

Even though prominent republican Senators admitted that the Trump tax cuts would result in corporations using that to buy back stocks, not hire people or wage raises, they still pushed the tax cut thru, increasing the debt at hyper speed ---and as these corporations continue pumping cash into stock repurchase programs -- at the expense of investing in employees and society on the whole -- it is worth noting that the practice has only been legal for the past few decades.

When did it become legal? Well -- during the Reagan years -- before then stock buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation once they became legal it opened the floodgates for companies to start repurchasing their stock en masse -- why did Reagan want this? Because corporations told him to.

What were the pros behind making this legal? They lead to a rise in stock prices, which can have a marginally positive effect on consumer confidence and consumption. And shareholders are, obviously, people — albeit not the majority of them. Again, about 80 percent of all stocks are owned by the richest 10 percent of Americans.

What are the cons behind making this legal? Stock buybacks worsen wealth inequality. Stock buybacks have been a prime mode of both concentrating income among the richest households and eroding middle-class employment opportunities.

So I will keep this simple and sweet -- if you claim to be the for the middle class and working class Americans -- then I want to ask 3 questions:

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??


2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

3. Would you oppose standing up to corporations when it comes to stock manipulation simply because you think it would make libs mad??

The wage gap we have today started under Reagan, and it makes republicans horny everytime the gap grows.

 

[task0778]

One more point to make here, much of the stock buyback "hysteria" between 2007 and 2016 is due to the fact that the economy was very sluggish and stayed that way after the recession was over, thanks in large part to the economic policies of the Obama Administration. When you stifle economic growth by raising taxes on investments and increasing the cost of compliance with gov't regulations, to the point where the ROI (Return On Investment) for business startups or expansion was too weak relative to the risks involved. Money flows to where it can make the most and safest return, and so companies raised capital from buybacks but passed it on to the shareholders instead of expanding or growing their business. Which is where you create more jobs and increase wages. IOW, the middle and lower income folks got fucked, but not due to the share buybacks but rather due to the dis-incentives to re-invest capital.

 

[mudwhistle]

It’s Time to Ban Stock Buybacks

Even though prominent republican Senators admitted that the Trump tax cuts would result in corporations using that to buy back stocks, not hire people or wage raises, they still pushed the tax cut thru, increasing the debt at hyper speed ---and as these corporations continue pumping cash into stock repurchase programs -- at the expense of investing in employees and society on the whole -- it is worth noting that the practice has only been legal for the past few decades.

When did it become legal? Well -- during the Reagan years -- before then stock buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation once they became legal it opened the floodgates for companies to start repurchasing their stock en masse -- why did Reagan want this? Because corporations told him to.

What were the pros behind making this legal? They lead to a rise in stock prices, which can have a marginally positive effect on consumer confidence and consumption. And shareholders are, obviously, people — albeit not the majority of them. Again, about 80 percent of all stocks are owned by the richest 10 percent of Americans.

What are the cons behind making this legal? Stock buybacks worsen wealth inequality. Stock buybacks have been a prime mode of both concentrating income among the richest households and eroding middle-class employment opportunities.

So I will keep this simple and sweet -- if you claim to be the for the middle class and working class Americans -- then I want to ask 3 questions:

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??


2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

3. Would you oppose standing up to corporations when it comes to stock manipulation simply because you think it would make libs mad??

I have no opinion on this other than pointing out one simple issue.
Since when did it become illegal to turn a profit??
What kind of capitalistic economy decides that wealth creation is bad???
I guess it's only okay to make money if you're willing to stay on the Democrat plantation.
Other then that, your ass doesn't deserve to make money.

 

[Toddsterpatriot]

It’s Time to Ban Stock Buybacks

Even though prominent republican Senators admitted that the Trump tax cuts would result in corporations using that to buy back stocks, not hire people or wage raises, they still pushed the tax cut thru, increasing the debt at hyper speed ---and as these corporations continue pumping cash into stock repurchase programs -- at the expense of investing in employees and society on the whole -- it is worth noting that the practice has only been legal for the past few decades.

When did it become legal? Well -- during the Reagan years -- before then stock buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation once they became legal it opened the floodgates for companies to start repurchasing their stock en masse -- why did Reagan want this? Because corporations told him to.

What were the pros behind making this legal? They lead to a rise in stock prices, which can have a marginally positive effect on consumer confidence and consumption. And shareholders are, obviously, people — albeit not the majority of them. Again, about 80 percent of all stocks are owned by the richest 10 percent of Americans.

What are the cons behind making this legal? Stock buybacks worsen wealth inequality. Stock buybacks have been a prime mode of both concentrating income among the richest households and eroding middle-class employment opportunities.

So I will keep this simple and sweet -- if you claim to be the for the middle class and working class Americans -- then I want to ask 3 questions:

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??


2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

3. Would you oppose standing up to corporations when it comes to stock manipulation simply because you think it would make libs mad??

The wage gap we have today started under Reagan, and it makes republicans horny everytime the gap grows.

The wage gap we have today started under Reagan, and it makes republicans horny everytime the gap grows.

Is that why Republicans loved Obama so much?

 

[Biff_Poindexter]

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??

Yeah baby!! Higher stock prices are awesome!

2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

If they buy back, for instance, 10% of their outstanding shares, the remaining 90% are more valuable.
The remaining 90% have the same earnings spread over a smaller number of shares and therefore, more earnings per share. That's not manipulation, that's math.

3. Would you oppose standing up to corporations when it comes to stock manipulation

I oppose improper usage of the term manipulation.

So for all the decades before when people felt it was manipulation, they were wrong -- and the corporations were right? got it

 

[Biff_Poindexter]

It’s Time to Ban Stock Buybacks

Even though prominent republican Senators admitted that the Trump tax cuts would result in corporations using that to buy back stocks, not hire people or wage raises, they still pushed the tax cut thru, increasing the debt at hyper speed ---and as these corporations continue pumping cash into stock repurchase programs -- at the expense of investing in employees and society on the whole -- it is worth noting that the practice has only been legal for the past few decades.

When did it become legal? Well -- during the Reagan years -- before then stock buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation once they became legal it opened the floodgates for companies to start repurchasing their stock en masse -- why did Reagan want this? Because corporations told him to.

What were the pros behind making this legal? They lead to a rise in stock prices, which can have a marginally positive effect on consumer confidence and consumption. And shareholders are, obviously, people — albeit not the majority of them. Again, about 80 percent of all stocks are owned by the richest 10 percent of Americans.

What are the cons behind making this legal? Stock buybacks worsen wealth inequality. Stock buybacks have been a prime mode of both concentrating income among the richest households and eroding middle-class employment opportunities.

So I will keep this simple and sweet -- if you claim to be the for the middle class and working class Americans -- then I want to ask 3 questions:

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??


2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

3. Would you oppose standing up to corporations when it comes to stock manipulation simply because you think it would make libs mad??

I have no opinion on this other than pointing out one simple issue.
Since when did it become illegal to turn a profit??
What kind of capitalistic economy decides that wealth creation is bad???
I guess it's only okay to make money if you're willing to stay on the Democrat plantation.
Other then that, your ass doesn't deserve to make money.

I don't believe a company turning a profit tops everything else -- that is why capitalism is REGULATED

 

[sartre play]

A huge amount of people who invested in the stock market & housing lost big time with the crash, people with average earnings who have kept investing in small ways through there jobs find out when they retire after taxes & costs most of there gains are related to what they put in them self's, saving for the future is a good thing , but if the government allows wall street , big business & greedy political lobbyist to have to much sway we can lose again.

 

[Toddsterpatriot]

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??

Yeah baby!! Higher stock prices are awesome!

2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

If they buy back, for instance, 10% of their outstanding shares, the remaining 90% are more valuable.
The remaining 90% have the same earnings spread over a smaller number of shares and therefore, more earnings per share. That's not manipulation, that's math.

3. Would you oppose standing up to corporations when it comes to stock manipulation

I oppose improper usage of the term manipulation.

So for all the decades before when people felt it was manipulation, they were wrong -- and the corporations were right? got it

So for all the decades before when people felt it was manipulation, they were wrong

Yes.

Buying back stock in the open market is not manipulation.
And it would probably happen less if dividends weren't double taxed.

 

[Biff_Poindexter]

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??

Yeah baby!! Higher stock prices are awesome!

2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

If they buy back, for instance, 10% of their outstanding shares, the remaining 90% are more valuable.
The remaining 90% have the same earnings spread over a smaller number of shares and therefore, more earnings per share. That's not manipulation, that's math.

3. Would you oppose standing up to corporations when it comes to stock manipulation

I oppose improper usage of the term manipulation.

So for all the decades before when people felt it was manipulation, they were wrong -- and the corporations were right? got it

So for all the decades before when people felt it was manipulation, they were wrong

Yes.

Buying back stock in the open market is not manipulation.
And it would probably happen less if dividends weren't double taxed.

I bet you also believe supply side economics works too

 

[Toddsterpatriot]

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??

Yeah baby!! Higher stock prices are awesome!

2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

If they buy back, for instance, 10% of their outstanding shares, the remaining 90% are more valuable.
The remaining 90% have the same earnings spread over a smaller number of shares and therefore, more earnings per share. That's not manipulation, that's math.

3. Would you oppose standing up to corporations when it comes to stock manipulation

I oppose improper usage of the term manipulation.

So for all the decades before when people felt it was manipulation, they were wrong -- and the corporations were right? got it

So for all the decades before when people felt it was manipulation, they were wrong

Yes.

Buying back stock in the open market is not manipulation.
And it would probably happen less if dividends weren't double taxed.

I bet you also believe supply side economics works too

Better than tax hikes.

 

[task0778]

1. How do you feel about corporations using the majority of their tax cuts to buy back their stocks??

Yeah baby!! Higher stock prices are awesome!

2. Do you feel we should repeal stock buy backs are at least regulate how they are being manipulated to inflate stock value?

If they buy back, for instance, 10% of their outstanding shares, the remaining 90% are more valuable.
The remaining 90% have the same earnings spread over a smaller number of shares and therefore, more earnings per share. That's not manipulation, that's math.

3. Would you oppose standing up to corporations when it comes to stock manipulation

I oppose improper usage of the term manipulation.

So for all the decades before when people felt it was manipulation, they were wrong -- and the corporations were right? got it

So for all the decades before when people felt it was manipulation, they were wrong

Yes.

Buying back stock in the open market is not manipulation.
And it would probably happen less if dividends weren't double taxed.

I bet you also believe supply side economics works too

Demand side economics sure as hell doesn't. There is no instance where raising taxes and increasing gov't spending has EVER lifted a poor performing economy out of it's doldrums.

 

[Brain357]

Buy backs should not be illegal. They were easily predicted. Republicans knew it would happen. Congress is the problem.