Jon Hartley of the Foundation for Research on Equal Opportunity writes against the stock-buyback tax in the Democrats’ reconciliation bill:
As the buyback tax becomes law, expect companies to move away from buybacks, and instead start issuing more dividends which has a lower tax rate, but remains a slower and more inefficient route to return cash to shareholders through regular recurring dividends on a quarterly basis (perhaps non-recurring special dividends will become more popular). Ultimately, this all just means those smaller, growing, and more innovative companies will likely have to wait longer to receive reinvested cash from the dividends of large companies which are being discouraged from issuing cash through buybacks.
Read the whole thing here.