Buyback Tax at 1% Is Too Small to Matter as CEOs Reward Holders

A new tax created by Democrats to slow a record pace of stock buybacks has been largely shrugged off by corporations that see the 1% excise levy as a minor cost of doing business.

The tax on publicly listed corporations -- created in President Joe Biden’s signature tax and climate plan and set to go into effect next year -- makes it slightly more costly for companies repurchase their shares. But the desire to use free cash to buy back shares appears to be stronger than any deterrent created by the tax.

“The buyback tax is bad policy, but ...