Dems’ Stock Buyback Tax Hits 401Ks, IRAs, and Pension Plans




Dems’ Stock Buyback Tax Hits 401Ks, IRAs, and Pension Plans

by John Kartch, Americans for Tax Reform

President Biden and Congressional Democrats are backing a new excise tax on stock buybacks to fund their reckless tax and spend spree. Raising taxes and restricting stock buybacks harms the retirement savings of any individual with a 401K, IRA, or pension plan.

This same provision was included in Democrats’ House-passed “Build Back Better” bill and estimated by the Congressional Budget Office to be a $124 billion tax hike.

Democrats are pushing this massive tax increase during a recession and at a time when 401K plan participants and people with IRAs have lost roughly $1.4 trillion and $2 trillion, respectively, since the end of 2021.

Stock buybacks explained

Stock buybacks return value to shareholders.

Public companies will often use residual cash flow to repurchase shares of their own company in the market. This action provides a distribution of cash to shareholders by reducing the number of outstanding shares, driving up the share price, and increasing per-share earnings for remaining shareholders.

Buybacks are a signal that companies are…



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