Democrats Propose 2% Tax On Stock Buybacks To Offset Their $3.5 Trillion Budget Plan

Senators Sherrod Brown (D-Ohio) and Ron Wyden (D-Oregon) proposed a bill on Friday to levy a new tax on the booming market for corporate stock buybacks, putting yet another target on Wall Street as Democrats offer a slew of new tax measures to help shore up funds for a $3.5 trillion budget bill that is facing stiff opposition from both sides of the aisle.

Goldman Sachs analysts predicted that U.S. firms would purchase back approximately $800 billion of their shares this year in a Monday letter to clients, implying that the proposed excise tax might earn around $16 billion yearly.

Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.), both Democrats, have spoken out against the proposed budget bill’s expense. Manchin has indicated he’ll back up to $2 trillion in new spending if Democrats can offset the expense with cost reductions and taxes, citing concerns about rising inflation.

Thanks to soaring company earnings brought in by Trump’s tax cuts in 2017, companies bought back a total of $806 billion in 2018, a 30 percent increase over the previous year’s record.