 Major US corporations are on a stock buyback spree. Media reports say that firms in the S&P 500 have buyback plans worth $238 billion through the first two months of this year. The spending frenzy by some of the richest companies in the world comes amid poor economic performance in many parts of the world and millions struggle to make a living. Why do corporations spend billions of dollars in stock buybacks and what advantages do they get from this? Eugene Perrier of breakthrough news explains. Buybacks also known as share repurchases or stock repurchases are essentially a way that publicly traded companies reward people for holding their stock. So many people have probably heard of dividends, a stock that pays dividends, which is a similar concept that when you hold the stock, whatever the rate of dividends may be at the end of the year, you're going to get X number of dollars paid out to you out of essentially the profits of the company. So if the company is profitable, you are rewarded for holding their stock. Now the thing about dividends though is that dividends are sort of set in stone and they're governed over longer periods of time, although they can be changed. So it's sort of a static reward for holding a stock. Now a share buyback or a stock repurchase is a similar concept as a dividend is that it's a reward, but it's just given essentially arbitrarily. So when companies have huge sums of money, they then look to reward those who are holding their stocks by doing large share buybacks and giving that money back to institutional investors and also wealthy individuals who hold their stocks. Now in the United States, about 89% of stocks are held by the 10% of wealthiest people. So the vast majority of the stock market is super, super wealthy people and big institutional investors, you know, BlackRock people like that and so on and so forth. So ultimately, the share repurchases, the stock buybacks end up being a way to redistribute the wealth that's created by the workers of these companies, the profits to the super wealthy investor class. This massive spending by these corporations takes place even as they and the politicians supported by them have resolutely opposed taxes on them. For decades, an entire school of economic thought and policy has argued that taxing rich corporations is bad for the country. How do we reconcile the argument that taxing companies will hurt them with the fact that they have billions to buy back stocks? You know, it's really amazing to see that there was total corporate opposition to the Build Back Better plan that would have expanded social rights, social programs, social programs in the United States from corporate America, the business roundtable for instance, which is the largest trade organization of the biggest corporations in America, the super major corporations, Walmart, you know, the Fortune 500 companies, people like that, they didn't want one dime spent from Build Back Better because they said it would destroy the whole country essentially. But what it really boiled down to at that time and what we saw from the obstructionist in Congress like Joe Manchin, Kristen Sinema and others is that these companies were deeply aggrieved and also wealthy individuals that part of Build Back Better was to raise taxes, including the corporate tax rate. Now, the corporate tax rate still would have been quite low if it had been raised from where it is now so-called 21%, which most corporations don't pay, to 28%, which is what President Biden was proposing. It would have raised about 400 some odd billion dollars, maybe up to close to 500 billion dollars in revenue from this corporate tax year on year. So that was considered to be far too much money for them. They didn't want to give that money away. But when you look at the combined share buybacks that have happened and been announced in 2021 and the first two months of 2022, it's $1.1 trillion. So over double the amount of money that they would have had to pay out had corporate taxes gone up, which would have helped address the affordable housing crisis in the United States with hundreds of billions of dollars, would have allowed the rebuilding of public housing in the United States, would have set a clean energy standard by 2030, would have created the basis to expand childcare in a number of different ways, both from a child tax credit, a payment to families, and also to a significant expansion of subsidies for childcare, free community college, cheaper and more expanded healthcare for working class people, especially senior citizens. So all of these positive things would have been done. It would have only cost these major corporations 400 and some odd billion dollars. They were 100% dead set opposed to paying taxes for that. But then in the past year and two months, they have given out $1.1 trillion to super wealthy stockholders, who it must be stated also would have been hit by higher taxes. This type of money that you get and share repurchases would be considered capital gains, which is actually taxed at a lower level than an income tax. So not only do you see the corporations just thumbing their nose at the idea that they should have to pay anything in order to improve the situation for the average person here in the United States, but they're then redistributing that those profits to super wealthy individuals who themselves will massively gain if they pay taxes on it all by paying a significantly lower tax rate than the income tax that the primary is the primary form of taxation that working class people are subjected to. So all around it's an unbelievable statement about the callousness of the ruling class in the United States, both individually and in their corporate personas, that they really ultimately are willing to do nothing that endangers their ability to continue to enrich themselves at obscene levels. What does this massive spending say about the state of regulation in the United States? Has there been or is there any serious proposal to use some of this wealth for the benefit of the vast majority of the people? You know, I would say that what we're seeing here does show certainly the failure of regulatory efforts. There have been some things that have happened in the past to certain sort of one-time appropriations, some of the things around the coronavirus money, the COVID-19 recovery funds, rescue funds, where there was prohibitions placed on stock buybacks. This has happened a few times in the past with certain elements when certain industries are bailed out, there's a certain limit of time where you're unable to do it. The Federal Reserve has at different moments limited stock repurchases for certain periods of time, but there's never been any sort of overall attempt to regulate this or ban this. It's usually just when the PR is really bad, when the government is handing out large amounts of money that they create basically a lockup period, which ultimately doesn't prevent these companies from doing share repurchases like the day that it's over. And we often see this happen with limits that are placed on share repurchases, but ultimately this is one of the most important ways in which the stock market continues to attract the money of large institutional investors, big banks, super wealthy people is to do something like this and there's no real desire to address it in a serious way. Any legislation that's ever been sort of put out to try to address it more significantly and more consistently over time has never succeeded. So this is really par for the course unfortunately here in the United States where the interest of the super wealthy and the interest of the Wall Street banks always seem to prevail over the interest of the people when the two are in contradiction with one another.