WASHINGTON, March 27 (Xinhua) -- U.S. Democratic Senator Tammy Baldwin on Wednesday reintroduced a bill to rein in corporate stock buybacks, which have spiked last year, partially driven by the Trump administration's tax cuts.
"Corporate profits should be shared with the workers who actually create them. It's just wrong for big corporations to pocket massive, permanent tax breaks and reward the wealth of top executives with more stock buybacks, while closing facilities and laying off workers," said Senator Baldwin in a statement.
On Tuesday, Baldwin released a report on the impact of stock buybacks, arguing that buybacks restrain wage growth and widen income inequality.
She and other Democratic senators held a hearing Tuesday afternoon to discuss the issue. Democratic lawmakers have insisted that the Republican tax law rolled out in late 2017 fueled buybacks instead of encouraging investment, and have repeatedly criticized the law as a giveaway to the wealthy.
Share buybacks by S&P 500 companies hit a record 223 billion U.S. dollars in the fourth quarter of 2018, taking the total for the year to 806 billion dollars, up by 55.6 percent from that of 2017, according to a new S&P Dow Jones Indices report released Tuesday.
Share buybacks by S&P 500 companies could hit 1 trillion dollars in 2019, as strong cash positions allow companies to reward shareholders even as earnings growth returns to normalized levels, according to the report.
Baldwin's Reward Work Act is co-sponsored in the Senate by Kirstin Gillibrand, Bernie Sanders and Elizabeth Warren.
The act would ban open-market stock buybacks that "overwhelmingly benefit" executives and activist hedge funds at the expense of workers and retirement savers, and would also empower workers by requiring public companies to allow workers to directly elect one-third of their company's board of directors, according to the statement.
Shane Larson, director of legislation, politics and international affairs at Communications Workers of America (CWA), said CWA members are proud to support the Reward Work Act, "which would help address one of the most harmful parts of the tax bill and encourage companies to invest in their workers instead of just filling the pockets of the 1 percent."