Companies Couldn't Buy Back Their Stocks Until Reagan Changed The Rules - Don't Forget

[DanieRains]

One of the many reasons for the slow decline of worker compensation, and rise of huuuuge government debts.

The old days corporations re-invested their profits, or paid dividends that got taxed (at a low rate of course but was tax revenue).

Just sayyin...

[jimfields33]

1. And another Reagan law that nobody wants to reverse.

We hear this constantly that Reagan laws did this or that but yet since we’ve had 5 presidents and various congress’. And weirdly Reagan had a democratic house the entire time and a democratic senate for a portion.

[Caliman73]

5. A lot of what he did was through changing how the various departments were run.

He had Secretaries of Education, who were against public education. Secretary of the Treasury who was a Chicago School fanatic. True, there was a divided government, which stymied his worst efforts, but Reagan increased the powers of the Presidency immensely and used that power to dismantle a lot of the New Deal.

The people that followed, including Clinton and to some extent President Obama, were either moderates who favored some of the new paradigm, or who were not in a position to reverse course back to the New Deal.

[Kingofalldems]

11. Reads like right wing talking points from here.

Lots of people want it reversed. Republicans don't of course.

[IronLionZion]

17. It's an SEC rule

SEC can be slower than molasses at reforming things that don't make the front page of the Wall St Journal.

[JustABozoOnThisBus]

2. Dividends got taxed at a low rate? I thought they were ordinary income.

Not that the tax on mine would cause a ripple in the nation's budget, but ..

[Sgent]

7. They are

Qualified dividends are taxed at a lower rate, but that's a relatively new invention (Bush tax cuts I believe). All other are taxed as ordinary income and historically all have been.

[ProfessorGAC]

14. That's Correct

Starting in 2003, dividends were taxed the same as long term capital gains.
For higher income earners, starting in 2012, dividends above a certain level were taxed as regular income.
Actually, there is some economic logic to taxing dividends lower as it encourages long term, safe investments, reducing market volatility.
An upper cap makes a lot of sense too.
I'd like to see gains taxes increased with dividend income taxes about where they are now.
It helps prevent some (not all) of the short term thinking driving corporations to focus more on stock prices than other sustainability strategies.
Paying higher dividends makes stock ownership attractive, too. After all, ROI is a combination of gains & dividends.

[Sgent]

19. Note that qualified dividends are taxed at capital gains rates

about 2/3 of the dividends from an S&P 500 fund are qualified, and certain companies (REITS, oil and gas) almost never issue qualified dividends.

[wryter2000]

3. Figures

The man was the author of so much that began our decline.

[Caliman73]

4. I don't know if people realize just how much Reagan and his ilk restructured society.

Prior to Reagan, we were living in the New Deal society, with the New Society thrown in (though still young). Reagan began the process of completely reversing those policies. Of course her couldn't get rid of Social Security or Medicare and Medicaid, but her certainly tried. He lowered the tax rates on the wealthy, INCREDIBLY and shifted that burden onto middle and working class people. He started to tax Social Security to make up for the lost revenue. The cost of education (higher education) was also shifted away from the states to the individual. Prior to the 80's for public colleges, the State typically picked up about 70% to 80% of the costs and the student 20%. Reagan and his people changed that completely. Reagan started the march to deregulation on the financial industry, telecommunications, and many others. He waged war on organized labor (except for Police Unions).

You are absolutely right. Reagan put us on the course that we are still on today. He is a direct lineage to Trump.

[leftstreet]

6. But it's been decades. Why hasn't this shit been reversed? n/t

[Caliman73]

8. Because of right wing propaganda and failure to capitalize on movements.

This is a criticism of liberals from people further on the left. The criticism goes, that liberals work from within the system of Capitalism to "reform" it, but the system is very strong and tends to shape the people living within the system to perpetuate itself.

If the Democrats raise taxes on the wealthy back to levels in the 60's and 70's then "it will cause an entire collapse of society", which is not true, but it will make the wealthy slightly less wealthy and they cannot have that. The wealthy donate to both parties. To Republicans as a means of pushing through ever more radical changes, and to Democrats as a holding action.

Democrats are by far, by far far far, better than Republicans, but they are still beholden to the system as it operates now. Joe Biden's policies are more progressive than a lot of people thought they'd be, but they are still fairly moderate. He isn't pushing for a restructuring of society, just a return to the liberal policies of the 60's and 70's. The Republicans call this "Radical Socialism" and most people, who have no goddamned clue what Socialism really is, eat it up.

With a coordinated right wing media, a corporate owned mainstream media, and the Republican party obstructing everything, it is very difficult to get even moderate legislation passed let alone transformative legislation that would expand the social safety net and equalize society.

[appalachiablue]

12. +1 Killed mental heath care, reduced housing

help since Gov. of CA, ignored Aids, delayed research, more. Enormous damage.

[ShazzieB]

16. Whoa. I did not know this...

"The cost of education (higher education) was also shifted away from the states to the individual. Prior to the 80's for public colleges, the State typically picked up about 70% to 80% of the costs and the student 20%."

That explains a lot to me, like why full time tuition at the state funded university was only about $300 a semester around $1,950 in 2021 dollars), and tuition at the same school now costs almost $5,000 a semester. Thanks, RayGun!

[MichMan]

22. How did a president force the states to stop funding their own colleges?

I dont understand how they would have that power

[multigraincracker]

9. Before Saint Ronnie, for evangelist the biggest sin was divorce.

Because he was divorces and remarried, plus he sign the no-fault divorce law in California, they had to find some new sins. They picked gay-marrage and abortion.
Now you know the rest of the story...

[bucolic_frolic]

10. Yeah, no surprise, financial incest is a Republican wet dream /nt

[Mopar151]

13. Reagan, Inc.!

He was the face of a cabal of Old Right Idologues, and their biggest fan!

[IronLionZion]

15. And they could before FDR made it illegal

It's an SEC rule.

There are Dems who want to reform it like Baldwin, Warren, Gillibrand, Booker, Casey, etc.

https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans

Buybacks are restricted in other developed countries in Europe and Asia.

[twodogsbarking]

18. Well.

[SergeStorms]

20. And no IRS tax increases for working people.

He did have the IRS take away many tax deductions however, so in essence there were sizable tax increases for working people.

People used to be able to deduct interest paid to banks, credit card companies etc. ZAP! Not with Ronnie Rayguns in charge. They could deduct the mortgage interest paid on second or vacation homes. ZAP! Not with Ronnie Rayguns in charge. They could deduct sales taxes paid. ZAP! Not with Ronnie Rayguns in charge.

There were a slew of IRS deductions working people used to be able to use, but not with Ronnie Rayguns in charge.

Then of course there were new tax dodges devised for corporations and the wealthy. We couldn't have them paying as much tax, because of.......well, you know,
T
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D
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And we all know how well that benefited working people, right? Ronnie Rayguns did more to hurt working people than almost any other president in history. And of course republicans lionized the doddering old fool. Terrible actor, terrible president.

[MichMan]

23. How did all those tax laws pass the Democratic house?

[SergeStorms]

24. They were changes in deductions....

not tax increases, not tax decreases. They could change the deductions and not have to go through Congress. I believe they still can.

[mathematic]

21. Companies that reinvest all their "profits" are routinely accused of dodging taxes

Of course, money reinvested into the business are not profits. They're part of the cost of operating the business.

So are profits used to expand the business by developing new products, expanding production, or research and development acceptable ways to use the money the company generates?

On the other hand, profits used to buy back shares actually are profits and corporate income taxes are owed on that.

Actually, now that I think about it, what exactly is the problem with buying back stock? Not every company needs to spend all their money in a never ending drive to expand their business. Long term individual dividend and capital gains tax rates are the same, with dividend "long term" rates (they use the term "qualified dividends&quot only requiring you hold the stock for 60 days while long term capital gains requires you hold the stock for a whole year.