Hillary Clinton Tax Proposals:
1. Change long term capital gains from 1 year to 6 years.
2. 2-3 years holding period would be taxed at ordinary tax rates instead of <1 year now.
3. Reduce capital gains tax on small business or "innovative" new businesses (Who defines "innovative"?)
4. Change carried-interest tax laws which are unfair.
5. Take a HARD LOOK at stock buybacks. Waiting an entire quarter to report buybacks seems too slow, other countries are "next day".
6. Change corporate executive compensation. Too many high payouts when companies and employees are suffering. Execs make 300 x's what employees make, versus 50 x's in the past.
I for the life of me don't get the buybacks one -- buybacks are literally a return of shareholder capital -- no different than a dividend, except theres better tax treatment for the shareholder.
1.) shareholders own the business. if there is an excess of cash after considering all NPV-added capital projects, you have two choices, keep it in retained earnings or return it to shareholders.
Dividends are often not a great choice because they are tax-disadvantaged (double taxation) and they project to the market -- if you later have to lower dividends the market takes that as a very bad sign, even if the reason is because, say, you're business is so great you decide to plow all that back into capital projects. I want the managers of the companies I hold shares in to be good stewards of capital and take these items into consideration
Compare that to simply just reducing or ending your buyback -- market wouldn't notice or care particularly.
Another point is that many companies buy back stock to offset ESOP. Another reason is that perhaps they have a target debt/equity ratio in mind for the corporate capital structure -- given that more debt in some cases is preferential bc it will act as a tax shield since interest is deductible. In this case buying back stock just increase financial leverage.
The last point is that no matter how much you buy back, shareholder value is unchanged bc Free Cash Flow is unchanged and that is the real metric with which to value a business, more so than eps.
(also just to be clear that whole rant and rave was a rebuttal to Hilary's misguided populism strategy here, not a critique of your reply Tim)