Auburn, CA — Area Chipotle Mexican Grill worker Denise Hancock revealed at a company local restaurant meeting that she’s thrilled about the effects of the Republican tax reform plan enacted a couple of years ago. Denise, who’s been working at the McDonald’s-owned hipster burrito joint for the past year, says she’s pleased about corporations using their generous tax breaks to buy back stocks.
“I think it’s great that our public corporations will be less responsive to shareholders now that they’re buying back all their public stocks,” said a beaming Ms. Hancock. “I know I’m not going to see a raise or anything, but I’m glad older folks can sell off their stocks and buy that vacation home they’ve been eying for a few years.”
Following the massive tax cuts the Republican majority Congress granted in 2017, instead of channeling their profits into productive investment, S&P 500 companies are on pace to plow a record-setting $800 billion into buying back their stocks per year.
The point of such “stock buybacks” is to increase a firm’s share price (and, in many cases, the performance-based pay of its CEO) by reducing the supply of shares on the market. However, in some accounts, employee wages have decreased after the tax plan due to inflation pressures on the economy.
“Who needs health care, new roads and bridges, daycare for their or lifting American children out of poverty when CEOs are getting these huge bonuses,” continued Ms. Hancock. “I mean, what the heck do us little people know anyway? I love skyrocketing deficits and debt that my generation will have to pay for. It’s great. If I could afford to contribute to a 401K or something, I’d be even happier than I am right now.”
Defenders of buybacks argue that they are a legitimate use of excess cash. The money doesn’t vanish. Shareholders can use their winnings to boost the economy by investing in new companies or purchasing a home. That is if one has stocks or has the capital to purchase a home. But as for Ms. Hancock, she’s keeping her chin up.
“I’m glad someone is doing well,” said a grinning Ms. Hancock as she looked down at her feet. “I figure I’m just a millionaire in waiting. I need to keep a positive attitude as my boss says, and good things will come to me.”