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At first look the reply appears apparent—no. However not everybody sees issues that approach. Right here’s Bloomberg:
Biden can even ask lawmakers — as he did in final yr’s finances request — to impose the 21% minimal on multinational firms, which the White Home says would end in substantial new taxes on pharmaceutical corporations. He additionally desires to quadruple the tax corporations should pay after they purchase again their very own inventory to 4% from 1%. Democrats have proposed buyback taxes as a strategy to encourage corporations to put money into workforces and gear over share repurchases.
Firms have a number of other ways of rewarding buyers. One methodology is dividends. One other strategy is to make use of a inventory buyback, which results in capital positive factors. Many buyers choose to obtain capital positive factors, that are usually handled extra favorably than dividends within the federal tax code (partly as a result of the positive factors usually are not taxed till the inventory is bought.) By taxing inventory buybacks, the federal government could be elevating the efficient tax charge on capital formation.
These taxes don’t encourage funding—simply the alternative. As an alternative, they have a tendency to push funding into much less productive areas. Thus suppose firm A can earn a 5% charge of return on capital and firm B can earn a ten% charge of return. Ideally, income earned by firm A could be paid out to house owners, who would redirect funds to investments made by firm B. This tax provision appears motivated by the will to make every firm extra self reliant, relying by itself inner funds for capital funding. However an economic system the place every group is self-sufficient is way much less environment friendly than an economic system structured round specialization and commerce.
Maybe there’s another motivation for this proposed tax change. If that’s the case, I can not think about what it’s.
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