There is nothing wrong with stock buybacks.
Democrats would be better off focusing attention elsewhere.
I shouldn't need to say this, but this is a political blog and over half of my readers are Democrats. They hear things from Bernie Sanders and Elizabeth Warren like "obscene profits" and "profit-hungry corporations." It is easy to fall into a mindset, so let me say it: Profits are a good thing.
Left-oriented Democrats have conflated a real problem--inequality of incomes--with the creation of wealth itself. Inequality is a problem. Distribution of wealth is a problem. More wealth and more profits are not. Democrats should be on the side of creating abundance. Abundance happens because the economy is working and people are profiting from enterprise.
I understand that businesses are not angels. Stifled competition and price fixing grossly distorts the price of insulin, a very visible failure of the market system. Railroads have been using monopolies to gouge shippers since before the Civil War. Out of town readers will find it hard to believe, but a direct flight from Medford to the San Francisco hub, 400 miles, is nearly as expensive as flying from Medford to San Francisco and then on to Beijing. United Airlines doesn't have competition on that direct flight to SFO. Crazy but true.
Individuals and corporations invest money in productive things because they think they will get a return from it. Democrats who have gotten accustomed to thinking of corporations as "suspect" need to think smaller for a moment. Think of individuals considering creating some affordable housing. Why would they build a rental house if they didn't think they could then rent it out and get a return?
Democrats will win more elections if they get comfortable saying the word "profit" in their speeches. It is the twin sound of "high wage jobs." They go together. Democratic candidates should practice saying it aloud. Most Americans do not take a vow of poverty. They want more and nicer things for their families.
An individual or company needs to do something with profits, probably distribute them. One way is to pay a stock dividend. It is a corporate version of a landlord getting a rent check. A corporation that pays regular dividends--perhaps one that amounts to a 5% yield on its current stock price. It sets up an expectation for investors. It is a kind of obligation for the company because it sets up an expectation that the company is equally profitable in all conditions, which it is not.
A stock buyback is another way for a corporation to distribute profits. There is nothing clandestine about it. Biden's proposed 4% tax on buybacks is rooted in the presumption that there is something wrong with profits making people richer by making stocks more valuable, as if that is different from making them richer by paying them cash. They need to get over that. Buybacks have the same net affect as a cash dividend. A company that buys up shares in the open market--say 5% of the outstanding shares--returns money to stockholders by making their outstanding shares presumably 5% more valuable. Either way the corporation distributes profits. Share buybacks allow companies to time those buybacks to times when they consider the stock price particularly low. No harm in that. Buyback plans are the right to buy shares, not the obligation to do so, which means that in tougher times they can suspend buybacks without the stigma of a dividend cut. No harm there, either. Some investors--retired people like me--prefer cash dividends. Others, who are in the "accumulate" time of life, prefer buybacks. Both serve a legitimate need.
Does a buyback create an unfair tax advantage? Possibly, if the tax rate on cash dividends is different from the tax rate on capital gains. Currently they are about the same, a bit lower than "regular income." If shares of stock are owned in a retirement account then either way, as dividends or as increased value, they are taxed as "regular income." Either way, dividends or buybacks, it eventually gets taxed at about the same rate.
This post is not a defense of "trickle down." I completely agree that our current economy is doing a poor job of distributing wealth and sustaining a broad middle class. That is causing social problems than are endangering our democracy. Civil distress and eventually revolutions happen when people think the system is irredeemably rigged against them. But the problem isn't profits or the profit motive or whether corporate profits are distributed as stock buybacks or as dividends.
Democrats should not waste time and effort fixing the wrong problem.
So what is your solution. How does the middle class get caught up with the last 40 years of inflation? The rich just keep getting richer with no real incentive to take better care of their employees.
This is a counterpoint to your argument on stock buybacks by Robert Reich:
https://open.substack.com/pub/petersage/p/profits-are-good?r=n9he7&utm_campaign=post&utm_medium=email