Warren Buffett not a fan of democrats new war on stock buybacks

Mar 2012
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New Hampshire
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Warren Buffett has publicly supported higher personal income taxes on billionaires.

But when it comes to the new attack on stock buybacks started this week by Senate Democratic leader Charles Schumer of New York and Sen. Bernie Sanders of Vermont, Buffett is less likely to be a vocal supporter. He has long separated his personal politics from what is best for his company and shareholders, and Buffett has long argued that in many instances the best use of all for corporate cash is share buybacks.

The Democratic war on buybacks is part of a broader messaging war making the case to Americans that the Trump tax cuts did not serve the vast majority of the country — corporations bought back their own stock with the tax savings rather than investing in workers and businesses. Buffett has a big financial interest in buybacks being preserved. His biggest stock holding, Apple, has been among the biggest buyers of its own shares in recent years. Berkshire Hathaway, which has never paid a dividend because Buffett is philosophically opposed to them, also has been increasing — and making more flexible — its buyback activity.

Buffett has maintained that there are many times when executive managers buy back their own shares for all the wrong reasons, but he has been clear over the years that there are times when a corporation faces no better investment choice than its own shares. He put it simply at the 2004 Berkshire Hathaway annual meeting: "When stock can be bought below a business's value it is probably the best use of cash." Schumer and Sanders intend to introduce "bold" legislation that will prohibit a corporation from buying back its own stock unless it invests in workers and communities first.

Buffett wrote in an op-ed for the Wall Street Journal in 2015 that there were better ideas than raising the minimum wage to $15 to help the poor in this country, such as expanding the Earned Income Tax Credit.

Why liberal billionaire Warren Buffett is not likely to be a big fan of the war on stock buybacks
 

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