Topics: Stock Buybacks, Taxing Stock Buybacks

Summary: : Stock buybacks are always going to be a dubious subject. Some will contend that it is an efficient practice for prudent balance sheet management. Others will argue that there is a better use of a company's capital than buying back its stock. As a company, issuing stock $($after their IPO$)$ may be a sensible way to raise capital. If the float of its shares becomes bloated, buying stock may make sense to reach the true value of the company. On the other hand, instead of buying back stock, perhaps the company should deploy its capital into R&D$,$ or modernize its infrastructure. Stock buybacks are generally bullish for the stock, but may lead to a credit rating downgrade for the company. With this kind of dichotomy, the company should have a clear objective for its strategy. For me$,$ like anything else, all things in moderation.

Questions:

$$ What is your position on stock buybacks? EXPLAIN

$$ How does the new tax affect your position? EXPLAIN

$$ How have companies, by in large, responded to the new U$.$S$.$ Buyback Tax?

$$ Explain how the $1\%$ tax is levied.

$$ What is the main purpose of the U$.$S$.$ Buyback tax?