The recent derailment in Ohio of a train hauling toxic chemicals revealed several things. One, the tragic rollback of key safety and environmental regulations by the Trump administration (such as requiring modern braking on trains carrying oil or hazardous cargo); two, the sheer corporate greed affecting our economy. Turns out that the train company, Norfolk Southern, not only pushed more cars onto that particular run (despite the concerns of employees) but had also overloaded them with hazardous materials.
The kicker? In early 2022, the company announced a $10 billion stock buyback. In light of the unnecessary environmental damage and the future lawsuits that are pretty much guaranteed, this is not a good look for them.
But Norfolk Southern is nowhere near alone in this financial practice. Rather than putting their profits back into things like safety, oversight, upgrades (looking at you, Southwest), or paying workers a living wage, hundreds of big companies simply plow them back into their own bank accounts. Stock buybacks largely benefit their top executives and wealthy shareholders. Granted, some employees may be able to get in on the deal, but the level at which they’re participating in this “largesse” is nowhere near what’s happening in the C-suites. Also, buybacks have essentially become a clever method to game the tax system – yet another way in which wealthy corporations get around paying their fair share.
In and of themselves, corporate profits are not a bad thing. That is, until they begin to adversely affect the public at the gas pump and grocery store, or in matters of safety. That’s when some form of oversight may be necessary.
Stock buybacks are extremely lucrative; in 2022 alone, companies clawed back 1.2 trillion (with a “T”) dollars in their own stock. They’re taxed for those windfalls at just 1 percent. During his recent State of the Union address, President Biden suggested raising that tax to 4 percent. Senators Ron Wyden (D-OR) and Sherrod Brown (D-OH) have introduced the Stock Buyback Accountability Act of 2023, designed to plow some of those profits back into our economy and perhaps pump the brakes a little on the corporate stock buying spree.
Considering the record profits that corporations have made in recent years (in 2022, Big Oil raked in $200 billion in profits; food and agribusiness moguls increased their wealth by 42 percent, even as consumers struggled), a 4 percent tax on their stock buybacks seems more than fair.
While the U.S. is indeed a capitalist system, there comes a time to take a hard look at how our largest corporate players are using that system. For example, our infrastructure benefits them (how many times do Amazon Prime drivers use our roads?), so paying their share to maintain it is just being a good corporate citizen.
Keeping a closer eye on stock buyback programs, and imposing a higher tax on them, seems a good place to start.
What are your thoughts on government getting involved with some of the business practices of large corporations? What other ways could they be encouraged to not abuse their profits or tax status? Got some thoughts? Let us know in our Community Soapbox!
Cindy Grogan is a writer, lover of history and "Star Trek" (TOS), and hardcore politics junkie. There was that one time she campaigned for Gerald Ford (yikes), but ever since, she's been devoted to Democratic and progressive policies.