Companies Use Tax Cut Savings to Buy Their Own Shares
- 6 years ago
Companies Use Tax Cut Savings to Buy Their Own Shares
Cisco said this month that in response to the tax package, it would bring back to the United States
$67 billion of overseas cash, using $25 billion to finance additional share repurchases.
Companies typically decide to make long-term investments in things like new workers
and factories based on whether they will make the company more profitable — not merely because the companies are sitting on a pile of money that they otherwise would have paid in taxes.
American companies in the have announced more than $178 billion in planned buybacks — the largest
amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.
But the vast majority of the billions of dollars in planned share purchases will benefit
the richest 10 percent of American households, who own 84 percent of all stocks.
President Trump promised that his tax cut would encourage companies to invest in factories, workers
and wages, setting off a spending spree that would reinvigorate the American economy.
But the purchases can come at the expense of investments in things like hiring, research
and development and building new plants — the sort of investments that directly help the overall economy.
Warren E. Buffett said in his annual letter to investors on Saturday
that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law.
Cisco said this month that in response to the tax package, it would bring back to the United States
$67 billion of overseas cash, using $25 billion to finance additional share repurchases.
Companies typically decide to make long-term investments in things like new workers
and factories based on whether they will make the company more profitable — not merely because the companies are sitting on a pile of money that they otherwise would have paid in taxes.
American companies in the have announced more than $178 billion in planned buybacks — the largest
amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.
But the vast majority of the billions of dollars in planned share purchases will benefit
the richest 10 percent of American households, who own 84 percent of all stocks.
President Trump promised that his tax cut would encourage companies to invest in factories, workers
and wages, setting off a spending spree that would reinvigorate the American economy.
But the purchases can come at the expense of investments in things like hiring, research
and development and building new plants — the sort of investments that directly help the overall economy.
Warren E. Buffett said in his annual letter to investors on Saturday
that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law.