Don’t kill share buybacks

SHARE buybacks are wrongfully under attack. They have long been a punching bag for American politicians, especially left-leaning ones, such as Senators Bernie Sanders and Elizabeth Warren. Critics of share buybacks claim these transactions – which involve a company purchasing its own stock from shareholders – divert resources away from employees, investments as well as R&D.

They point to moves like the one recently made by Starbucks’ Howard Schultz, who suspended buybacks on his first day back as chief executive officer (CEO), to invest in employees and stores.

The most recent strike against buybacks was made by President Joe Biden in his 2023 budget plan. It comes in 2 forms: a 1-per cent stock buyback tax proposed by Democrats, and a ban on corporate executives selling company shares in the first 3 years after a buyback.