World Economy

GOP’s Marco Rubio takes aim at stock buybacks, already attacked by Dems


Rubio is the chairman of the Small Business Committee, which is releasing a report on the issue on Tuesday.

The report argues that more equal rates would remove companies’ incentives to buy back shares in the first place.

“Tax policy changes to end this preference might, on their own, increase investment by shifting shareholder appetite for capital return,” the report says.

Instead, it suggests using the revenue from a higher capital gains tax to encourage capital investment. The current tax law — passed by Republicans in 2017 with Rubio’s reluctant support — allows businesses to fully and immediately deduct their expenses, but the popular provision phases out after 2022. The new proposal would make that measure permanent and expand the types of investments eligible for the deduction.

The report calls the Tax Cuts and Jobs Act a “missed opportunity.”

“The existence of non-productive alternatives to capital investment, as a result, makes the product of the firm’s American workers less valuable while at the same time increasing profits, making possible a world of higher asset prices, lower investment in the economy, and lower worker pay,” it says.

The committee’s proposal is part of a much broader report on U.S. and Chinese competitiveness, and critical questions — such as how high the tax on capital gains should be — remain unanswered.

The message against stock buybacks has become a central theme for the early Democratic presidential contenders for 2020 — and a narrative that Republicans have fiercely resisted. But Rubio was a GOP outlier during the debate over the tax law, arguing for a higher corporate tax rate to offset the cost of a bigger child tax credit. Since then, he has repeatedly highlighted the relatively slow growth in wages compared with the massive jump in share repurchases.

“When [a] corporation uses profits for stock buyback, it’s deciding that returning capital to shareholders is better for business than investing in their products or workers,” he tweeted in December. “Tax code encourages this.”

The tweet highlights Rubio’s key philosophical difference with Democrats: Rather than blaming companies for reaping the benefits of the law, the report suggests they are reacting to poor incentives.

“If there is a problem with the raising and deploying of capital, then, it is not attributable to the firm’s response to its governors, but rather the terms upon which governance is set,” it says.



Source link

You may also like

Investing

Exclusive: Brazil’s Odebrecht to propose bondholder losses of over 70 percent – sources

post-image


The corporate logo of the Odebrecht SA construction conglomerate is pictured at its headquarters in Sao Paulo, Brazil August 3, 2018. REUTERS/Paulo Whitaker/File Photo

SAO PAULO (Reuters) – Brazilian conglomerate Odebrecht SA next week will ask its bondholders to accept losses of more than 70 percent from their bonds’ face value as part of a restructuring, two sources with knowledge of the matter said on Wednesday.

Around $3 billion in outstanding Odebrecht Finance Ltd bonds will be affected, the sources added, asking for anonymity to disclose private plans.

The exact size of the haircut is still undefined, but the person said it could be between 70 percent and 80 percent of the…

Read More
Forex News

Fed Minutes note concern about slowing global growth and China

post-image


Fed minutes released online

  • Full report
  • Important to continue to monitor financial market developments
  • Noted that some downside risks had increased
  • Business investment has moderated
  • Recent household data have been strong
  • Strong labor market, inflation near target
  • See continued sustained expansion
  • A few officials concerned that uncertainty not captured by the dot plot
  • Reserves might near efficient level later this year
  • Several participants said rate hikes might prove necessary only if inflation outcomes higher than baseline outlook

Excerpts:

“Market participants pointed to a number of factors as contributing to
the heightened volatility and sustained declines in risk asset prices
and interest rates over recent months including a weaker outlook and
greater uncertainties for foreign economies (particularly…

Read More
Crypto Markets

Judge Appoints 2 Law Firms to Represent Quadrigacx Clients

post-image


Two law firms have been appointed to represent the clients of insolvent Canadian crypto exchange Quadrigacx in court. The number of affected users has been estimated at approximately 115,000 and lawyers will have to contact as many as they can. The digital asset trading platform owes them approximately $190 million.

Also read: Hacked NZ Exchange Cryptopia Allowed to Reopen

Miller Thomson, Cox & Palmer to Reach Affected Users

Nova Scotia Supreme Court Justice Michael Wood issued a decision on Tuesday, Feb. 19, announcing the appointment of Toronto-based Miller Thomson and…

Read More
Company News

Britain managing Huawei risks, has no evidence of spying: official

post-image


LONDON/BRUSSELS (Reuters) – Britain is able to manage the security risks of using Huawei telecoms equipment and has not seen any evidence of malicious activity by the company, a senior official said on Wednesday, pushing back against U.S. allegations of Chinese state spying.

FILE PHOTO: A 5G sign is seen during the Mobile World Congress in Barcelona, Spain February 28, 2018. REUTERS/Yves Herman/File Photo

Ciaran Martin, head of Britain’s National Cyber Security Centre (NCSC), said Britain had yet to decide on its security policy for national 5G networks, but that Huawei equipment was subject to detailed oversight and strict government controls over where it was used.

“Our regime is arguably the toughest and most rigorous oversight regime in…

Read More
Investing

Amid trade talks, China urges U.S. to respect its right to develop, prosper

post-image


BEIJING (Reuters) – The United States should respect China’s right to develop and become prosperous, the Chinese government’s top diplomat told a visiting U.S. delegation, reiterating that the country’s doors to the outside world would open wider.

Myron Brilliant, executive vice president and head of International Affairs at the U.S. Chamber of Commerce (2-L) and Chinese State Councilor and Foreign Minister Wang Yi (2-R) attend a meeting at the Ministry of Foreign Affairs in Beijing, China February 19, 2019. Wu Hong/Pool via REUTERS

The world’s two largest economies began their latest round of trade…

Read More