John,

For most of the twentieth century, it was illegal for corporations to purchase their own stock to artificially prop up share prices. But in 1982, the SEC adopted a rule permitting companies to buy back their own stocks, and a free-for-all ensued.

By 2017, windfall profits from the Trump-GOP tax cuts created huge opportunities for corporations to cash in on these stock buybacks, and over the last five years, they have more than doubled, to $4.2 trillion -- including a record high of $1.2 trillion in 2022.

The trouble is, stock buybacks don’t create jobs, increase wages, or grow the economy. It’s a shell game that does not change the underlying value of the company. All they do is make corporate executives and shareholders richer.

Now, the Stock Buyback Accountability Act of 2023, introduced by Senators Sherrod Brown and Ron Wyden, would place a 4% tax on stock buybacks, to help discourage the artificial inflation of stock prices, and encourage corporations to invest in workers.

It’s time we held corporations accountable for their misuse of windfall profits. Tell your Senators to become co-sponsors of the Stock Buyback Accountability Act of 2023!

In the early twentieth century, companies used to reinvest as much as half of their profits into research and development, plant and equipment, worker retraining, additional jobs, and higher wages, helping grow the economy and improve workers’ conditions.

Now, according to the Academic-Industry Research Network, in the past ten years, 94% of corporate profits have been devoted to buybacks and dividends instead.

CEOs love stock buybacks, because most CEO pay is now in stock shares and stock options rather than cash. So when share prices go up, so does their compensation. And the value of their pay from previous years rises at the same time -- a huge retroactive pay increase, on top of their already outrageous compensation.

Stock buybacks mostly enrich the wealthy. That’s because about 90% of all corporate stock is owned by the richest 10% of Americans; over half is owned by the top 1 percent. So the system is further rigged in favor of the ultra-rich.

By doubling the taxes on stock buybacks, we can create an incentive for corporations to invest in workers instead of Wall Street. Let’s tip the scales back toward working families. Send a message to your Senators urging them to become co-sponsors of the Stock Buyback Accountability Act of 2023 now.

Thank you for doing your part to improve working conditions and the quality of workers’ lives.

- Amanda

Amanda Ford, Director
Democracy for America
Advocacy Fund