President Joe Biden recently presented a plan to quadruple the tax on corporate buybacks in his State of the Union address. This proposal is part of the Biden administration’s battle against “Big Oil,” and it is believed that large oil and gas companies should invest in production output instead of buying back their own stocks. While this may seem like a noble concept, there are several issues associated with it that could be detrimental to average Americans.
At first glance, one might think that corporations would bear the brunt of these taxes; however, this is not the case. Since these higher taxes will not be taken directly from corporations, consumers will instead be hit with higher prices for goods and services and workers will have lower wages due to the decrease in investment into stock market returns. In other words, ordinary Americans will foot the bill for this tax change.
Grover Norquist, president of Americans for Tax Reform points out how this affects retirement savings as well. He notes that 70% of corporate income tax is paid by workers through reduced wages, which then results in diminished share prices from a lack of investment into stock market returns. This means that one’s retirement fund could suffer greatly due to lowered profits from their investments over time. In addition, if major corporations pull back on their stock buyback programs due to increased taxes, small business owners could lose out as well since their stocks are often bought up by big players when they engage in buybacks. This would also reduce liquidity and cause investors to move away from small companies since they don’t have access to such massive buyback programs anymore.
There are other issues beyond just economic ones at stake here as well. The proposed increase in capital gains taxes could stifle innovation among startups who rely on venture capital investments or angel investors because those funds would become more expensive and difficult to get ahold of due to the extra costs involved with them now thanks to taxation policy changes like this one being proposed by President Biden. Higher taxes can also discourage entrepreneurship which can lead to fewer jobs being created as fewer people take risks and start businesses. Without an incentive for risk-taking and innovation, our economy stands still as progress halts under a heavy burden of tax policy changes that don’t necessarily benefit workers but instead only hurt them financially over time through decreased wages or higher prices for everyday items needed for life such as groceries or medicine, etc., not only do workers lose out but so does America’s overall potential for growth thanks to heavier taxation policies like those proposed by President Biden’s latest plan regarding corporate buybacks.
Raising taxes on corporate buybacks may sound noble – helping those affected by climate change – but when you look closer we come face-to-face with how this really hurts everyday Americans while Big Oil continues business as usual without too much disruption thanks largely because they are too big to fail anyway. It’s clear that if implemented in its current form without any revisions or modifications made then President Joe Biden’s plan has the potential to do more harm than good when it comes down it hitting ordinary citizens right where it hurts most – their pocketbooks.
