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Comment by whatshisface | Hacker News Reader

What are the investors going to do with that money? Any answer other than "put it under a mattress" would lead to either consumption growth or investment growth. Even if they are putting it under a mattress, that would just lead to consumption or investment growth at a future date.

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No, it can lead to asset growth (look at stock market and real estate returns) without any increase in consumption or investment.

I think you misunderstood the main point of @whatshisface.

If a company buys back shares from an existing investor (EI), EI now has cash and is likely to either spend that money (if they're a retiree selling shares for income) or reinvest that cash into some other investment. It's very unlikely that they're going to keep that new money in cash or a savings account.

That doesn’t necessarily create jobs or trickle down. If billionaire A buys stock in billionaire B’s company that provides an automated web service, money may change hands but the workers may not see any difference in salary. Maybe they need to spin up a few additional cloud instances to handle a new business area, but that won’t meaningfully impact Amazon’s workload.

Or suppose they buy a painting from another billionaire for $20 million - did that really create any jobs or middle-class wealth?

What's the alternative? The company that has decided it's not worth using the money just creates a pile of unused cash or starts spreading into new businesses to get better returns on it.

You can argue against the tax implications of buybacks vs dividends but either corporations give profits back to investors or they will just have to continue to grow bigger and bigger, which I think the same people hate even more than buybacks.

The alternative is to not do the tax cuts.

Or target the tax cuts at the poor who will spend it on goods and services.

44% of people already don't pay any federal income tax. I wouldn't call it a tax cut to give someone already paying zero (or less) an even greater share of the treasury.

The alternative is taxing the living shit out of companies and giving it to people. Because that is how you grow the economy, by making sure people have money to spend on things.

But we live under capitalism so giving money to people is out of the question. Money is for billionaires and shareholders.

I don't trust anyone who says tax "companies" rather than "the rich". It's like universal income. If you're talking about taxing someone other than the rich, you are talking about taxing people who can't afford it. If you're talking about giving money to someone other than the poor, you're talking about giving money to people who don't need it. Not everything that is counter-intuitive is a deep insight.

Ah OK, taxing the living shit out of companies or the investors and giving that money to people who spend it immediately seems to me to have nothing to do with companies using their profits on buybacks or dividends. Even with more taxes, some companies are going to do well enough to have made more money than they know what to do with, and sometimes returning money to the investors is probably their best option.

Alternative is you tax the profits at a higher tax rate (i.e. what the tax rate was before the tax cuts) and use the tax revenues to fund things that benefit the general public at large...

My bad I may have misread this thread to be about buybacks/dividends not taxation. I'm not against high taxes but with any level of taxation some companies are going to run into the problem of not having a useful way to use their money besides giving it back to investors (unless taxes are such that no company can succeed)

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