Comment by fakedang
1 hour ago
A wealth tax would also be beneficial in reducing wasteful stock buybacks. Without any benefits from high stock prices, boards and shareholders will be less inclined to impose those price targets on CEOs, CEOs will be less incentivised to "cheat" on quarter-based performance and the myopic share price performance view of their companies, hence will reduce stock buybacks and returning money to shareholders. That leaves very few options - either reinvest into the company or pay out dividends, and the latter is unfavorable for shareholders compared to the former.
i did recently see something interesting where if you look at buybacks from the Mag7, they basically almost entirely offset vesting employee RSUs. which kind of makes sense, those RSUs have to come from somewhere or they dilute the current shares.
i don't know that people on this website in particular would like the "solution" to that.
Why do you think a wealth tax would reduce stock buybacks? I don't see the relation.