The attack on share buybacks

Abstract Corporate share buybacks are under attack, mainly from the political left, but also to some degree right. Critics advocate increasing tax on in hope of inducing firms invest more and ways that benefit workers. This attack reflects a misunderstanding basic (textbook‐level) finance principles. The approach advocated by critics will backfire at growth‐stage firms, which less, not more, because payout‐tax increase reduce supply equity infusions. At mature generating ample free cash flow, managers can easily evade (unattractive‐for‐shareholders) real investments desire investing retained financial assets. Buyback should recognise punishing payouts per se would be counterproductive, focus instead making case for legislation creates incentives directly promote specific behaviours they desire.