Should stock BuyBacks be legal or illegal?
- Thread starter ZZman
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Lets do an analogy. You and a partner own a business. You want to buy him out. He says yes. You pay him for his ownership stake, and continue on with the business A little smaller, but still profitable. Your partner uses the money to go out and invests in another business. That other business grows.
Similar to a stock buyback. It is currently legal, and should remain so. All businesses, big and small should be allowed to expand, or contract as they see fit. Free market capitalism at work. Remember, the bought out stockholders will be doing something with the money they get from the the buyback. In many case they will be investing in the stock of other companies.
Similar to a stock buyback. It is currently legal, and should remain so. All businesses, big and small should be allowed to expand, or contract as they see fit. Free market capitalism at work. Remember, the bought out stockholders will be doing something with the money they get from the the buyback. In many case they will be investing in the stock of other companies.
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
Originally Posted by SeaJay
Lets do an analogy. Remember, the bought out stockholders will be doing something with the money they get from the the buyback. In many case they will be investing in the stock of other companies.
So would employees. They would most likely spend it generating economic activity in a consumer driven economy.
Lets do an analogy. Remember, the bought out stockholders will be doing something with the money they get from the the buyback. In many case they will be investing in the stock of other companies.
So would employees. They would most likely spend it generating economic activity in a consumer driven economy.
Originally Posted by Shannow
Why ?
If they can issue shares to raise capital, why not bring them back ?
It enriches the already weathly and CEO's who own stock options. Why not give the exployees as much as you spend in buybacks? They are actually working.
Why ?
If they can issue shares to raise capital, why not bring them back ?
It enriches the already weathly and CEO's who own stock options. Why not give the exployees as much as you spend in buybacks? They are actually working.
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Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
To what buybacks are you referring?
Companies buy back stock all the time. How is this financed by taxpayers?
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
To what buybacks are you referring?
Companies buy back stock all the time. How is this financed by taxpayers?
Originally Posted by ZZman
It enriches the already weathly and CEO's who own stock options. Why not give the exployees as much as you spend in buybacks? They are actually working.
Employees are welcome to invest in the company they work for. Furthermore other investors are more likely to be attracted to a company that gives valuable shareholder incentives, such as dividends and capital growth - share buybacks help to keep the share price up.
It enriches the already weathly and CEO's who own stock options. Why not give the exployees as much as you spend in buybacks? They are actually working.
Employees are welcome to invest in the company they work for. Furthermore other investors are more likely to be attracted to a company that gives valuable shareholder incentives, such as dividends and capital growth - share buybacks help to keep the share price up.
Sam_Julier
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Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
Can you please explain how "buybacks were basically paid for with a tremendous increase in the nation's debt". I'd like to understand the accounting, securities and tax law(s) behind this claim. No politics please. Thank you.
Sam
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
Can you please explain how "buybacks were basically paid for with a tremendous increase in the nation's debt". I'd like to understand the accounting, securities and tax law(s) behind this claim. No politics please. Thank you.
Sam
Originally Posted by Astro14
Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
To what buybacks are you referring?
Companies buy back stock all the time. How is this financed by taxpayers?
The Trump tax law of last year reduced the corp tax level and the extra money the companies had was used in most cases to do stock buybacks not to create more jobs as had been promised. A few companies gave some small one time bonuses to employees, tossing them a bone. The cost of the tax bill was mainly financed by increased federal government debt. They did not reduce spending to be able to reduce corp taxes. They just reduced taxes on corp and the spending stayed the same, so the tax bill was financed by adding to the deficit. Crazy. The deficit is now $22 trillion total. But last year it was $2 trillion. Conservatives use to worry about the deficit but seem to be ignoring it now.
Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
To what buybacks are you referring?
Companies buy back stock all the time. How is this financed by taxpayers?
The Trump tax law of last year reduced the corp tax level and the extra money the companies had was used in most cases to do stock buybacks not to create more jobs as had been promised. A few companies gave some small one time bonuses to employees, tossing them a bone. The cost of the tax bill was mainly financed by increased federal government debt. They did not reduce spending to be able to reduce corp taxes. They just reduced taxes on corp and the spending stayed the same, so the tax bill was financed by adding to the deficit. Crazy. The deficit is now $22 trillion total. But last year it was $2 trillion. Conservatives use to worry about the deficit but seem to be ignoring it now.
Originally Posted by Sam_Julier
Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
Can you please explain how "buybacks were basically paid for with a tremendous increase in the nation's debt". I'd like to understand the accounting, securities and tax law(s) behind this claim. No politics please. Thank you.
Sam
I think the contention is that the reduction in the corporate income tax rate gave corporations more liquidity that they have used for stock buybacks. But stock buybacks have been going on forever and, as others have mentioned, the cash that goes to former shareholders doesn't sit idle: it's likely invested in other corporate stocks. Incidentally, the current corporate tax rate is about on a par with other major, industrialized countries.
Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
Can you please explain how "buybacks were basically paid for with a tremendous increase in the nation's debt". I'd like to understand the accounting, securities and tax law(s) behind this claim. No politics please. Thank you.
Sam
I think the contention is that the reduction in the corporate income tax rate gave corporations more liquidity that they have used for stock buybacks. But stock buybacks have been going on forever and, as others have mentioned, the cash that goes to former shareholders doesn't sit idle: it's likely invested in other corporate stocks. Incidentally, the current corporate tax rate is about on a par with other major, industrialized countries.
The CEO's and exec's are actually working...trust me on that..
Buybacks are one of the tools used to preserve and maintain shareholder value. They do directly benefit employees who are shareholders or have company shares in their retirement plans.
Buybacks can also benefit long term employee compensation. Buybacks are more common in hi-tech and other emerging businesses as they tend to grant RSU's or options to attract, reward and retain talent. This practice eventually leads toward dilution (increasing the total number outstanding shares), potentially decreasing individual share value which can be managed through buybacks. In this way the buybacks, through preserving the values of stock based comp granted to key employees also provide a direct benefit to them.
Buybacks are one of the tools used to preserve and maintain shareholder value. They do directly benefit employees who are shareholders or have company shares in their retirement plans.
Buybacks can also benefit long term employee compensation. Buybacks are more common in hi-tech and other emerging businesses as they tend to grant RSU's or options to attract, reward and retain talent. This practice eventually leads toward dilution (increasing the total number outstanding shares), potentially decreasing individual share value which can be managed through buybacks. In this way the buybacks, through preserving the values of stock based comp granted to key employees also provide a direct benefit to them.
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Originally Posted by Danh
Originally Posted by Sam_Julier
Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
Can you please explain how "buybacks were basically paid for with a tremendous increase in the nation's debt". I'd like to understand the accounting, securities and tax law(s) behind this claim. No politics please. Thank you.
Sam
I think the contention is that the reduction in the corporate income tax rate gave corporations more liquidity that they have used for stock buybacks. But stock buybacks have been going on forever and, as others have mentioned, the cash that goes to former shareholders doesn't sit idle: it's likely invested in other corporate stocks. Incidentally, the current corporate tax rate is about on a par with other major, industrialized countries.
I am OK to make the corp tax rate whatever Congress wants. Just finance it with spending reductions, not federal government debt. Keep in mind the corp tax schedule has many loopholes. Few companies were paying the full corp tax rate on their profit.
Originally Posted by Sam_Julier
Originally Posted by Donald
It should continue to be legal. Its the tax law that gave companies all the extra money to do the stock buybacks that is screwed up. The stock buybacks were basically paid for with a tremendous increase in the nation's debt that few seem to care about.
Can you please explain how "buybacks were basically paid for with a tremendous increase in the nation's debt". I'd like to understand the accounting, securities and tax law(s) behind this claim. No politics please. Thank you.
Sam
I think the contention is that the reduction in the corporate income tax rate gave corporations more liquidity that they have used for stock buybacks. But stock buybacks have been going on forever and, as others have mentioned, the cash that goes to former shareholders doesn't sit idle: it's likely invested in other corporate stocks. Incidentally, the current corporate tax rate is about on a par with other major, industrialized countries.
I am OK to make the corp tax rate whatever Congress wants. Just finance it with spending reductions, not federal government debt. Keep in mind the corp tax schedule has many loopholes. Few companies were paying the full corp tax rate on their profit.
My property taxes went up so I raised the rent to my 8 units I really didn't want to.. While corporations may or may not be our friends they will raise the cost of their products as possible to keep their profit margins.
soas a cunsumer you are paying the taxes.
soas a cunsumer you are paying the taxes.
The company I work for used its corporate tax savings to buyback stocks and secure future pension funding... the claimed trickle-down savings never came to be. Instead they secured funding for obligations they had all ready promised and should have been funding all along.
Stock buybacks are done if the company believes the price is a good buy. By reducing the number of shares outstanding, each share becomes more valuable.
For people like me who have a large amount of a company's stock in a given company, it is generally a windfall.
Remember, we are a market economy.
A company has responsibility to maximize the wealth of its shareholders; this is more important than even profitability.
It has no obligation to its workers.
For people like me who have a large amount of a company's stock in a given company, it is generally a windfall.
Remember, we are a market economy.
A company has responsibility to maximize the wealth of its shareholders; this is more important than even profitability.
It has no obligation to its workers.
The problem isn't the buyback, what happens before the buyback is the problem. No one wants to buy a stock at a high. So why not drive the price down? Buy a small failing company, put it on your books for a few years as a loss. As the stock price falls the small investor bails and supports the downward trend. Then after a few years you buy it back, the government and possibly some billionaire investor takes you to court for cooking your books. You settle with the billionaire investor out of court and keep appealing government rulings against you for the questionable book keeping until years later instead of a 200 million dollar fine you pay 25 million over a period of 5 years.
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Originally Posted by wings&wheels
The CEO's and exec's are actually working...trust me on that..
Buybacks are one of the tools used to preserve and maintain shareholder value. They do directly benefit employees who are shareholders or have company shares in their retirement plans.
Buybacks can also benefit long term employee compensation. Buybacks are more common in hi-tech and other emerging businesses as they tend to grant RSU's or options to attract, reward and retain talent. This practice eventually leads toward dilution (increasing the total number outstanding shares), potentially decreasing individual share value which can be managed through buybacks. In this way the buybacks, through preserving the values of stock based comp granted to key employees also provide a direct benefit to them.
The average employee owns very little in stocks. Guess who does?
The CEO's and exec's are actually working...trust me on that..
Buybacks are one of the tools used to preserve and maintain shareholder value. They do directly benefit employees who are shareholders or have company shares in their retirement plans.
Buybacks can also benefit long term employee compensation. Buybacks are more common in hi-tech and other emerging businesses as they tend to grant RSU's or options to attract, reward and retain talent. This practice eventually leads toward dilution (increasing the total number outstanding shares), potentially decreasing individual share value which can be managed through buybacks. In this way the buybacks, through preserving the values of stock based comp granted to key employees also provide a direct benefit to them.
The average employee owns very little in stocks. Guess who does?
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