Here's What Warren Buffett Just Said About Stock Buybacks
The Biden administration has attempted to discourage corporate stock buybacks, with a 1% tax on the practice included in the Inflation Reduction Act. But there are several prominent lawmakers – Biden included – who don't think this goes far enough. In his recent State of the Union address, Biden suggested quadrupling the tax to 4% of the buyback amount.
There are a few reasons for this and other proposals to curb buybacks. Some feel corporations simply don't pay enough taxes and this would be a way to boost IRS revenue. And many feel companies should use their profits to reinvest in the growth of their business, to raise employee pay, and for other purposes besides simply boosting shareholder returns.
To put it mildly, legendary investor Warren Buffett disagrees. In his recent letter to Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) shareholders, Buffett defended corporate buybacks when done for the right reasons and had some harsh criticisms for those who call stock buybacks harmful. Here's what Buffett -- a lifelong Democrat -- had to say.
Source Fool.com
