Why Tax Stock Buybacks?

Traders work on the floor of the New York Stock Exchange ahead of the closing bell on Aug. 15, 2018. Share buybacks are now one of the biggest sources of demand for stocks. Eduardo Munoz Alvarez/Getty Images

Commentary

The Biden administration has passed a 1 percent tax on stock buybacks. A stock buyback is when a public company uses its own cash to buy back its own stock. Sometimes it is financially in the best interest of the company to actually borrow money to buy back stock.