That money is rendered worthless from an economic perspective. In a healthy economy the profits of corporations are spent on more facilities, more suppliers, more employees, who all in turn spend their profits on the same.
We don't have a healthy economy. We have corporations that lose money every single day of their entire existence, but manage to drive their share prices by tax scams, accounting fraud, government subsidies, and share buybacks financed with debt the would not be available to them but for the existence of the scams, frauds, and government subsidies.
In that sense these corporations do not do anything of value, they are merely ephemeral structures to facilitate tax and investment risk avoidance for a certain class of people, at the expense of a tax base they do not participate in so should logically be shut out of.
When a corporation uses that money to buy back shares the money is effectively destroyed by being circulated among a financial class that has (mostly) bribed their way out of the tax system.
Hence, any money used for share buybacks should logically be treated as net income for the company in question's next filing.
> In a healthy economy the profits of corporations are spent on more facilities, more suppliers, more employees, who all in turn spend their profits on the same.
Only if those investments will create more profit. If capital cannot be allocated effectively (i.e. a company that returns $1 for every extra dollar invested above current ability) then the profit should be returned to the shareholders.
> We have corporations that lose money every single day of their entire existence, but manage to drive their share prices by tax scams, accounting fraud, government subsidies, and share buybacks financed with debt the would not be available to them but for the existence of the scams, frauds, and government subsidies.
Sure there are companies like this.
> at the expense of a tax base they do not participate in so should logically be shut out of.
I mean, you shouldn't pay taxes if you lose money... Shareholders/employees still pay taxes here.
> When a corporation uses that money to buy back shares the money is effectively destroyed by being circulated among a financial class that has (mostly) bribed their way out of the tax system.
Say we have 100 shares of a company. The company makes $100 per year. Each of those shares own $1 per year of the company. If they company pays $50 to buy back 50 shares then each of the remaining shares owns $2 of that $100. I mean, the market still decides what the stocks are worth, but eventually most if not all stocks get valued fairly. How is the money being destroyed?
Again, if the company cannot invest the money profitably to make more money, it should return it to the owners of the company. Are you against private ownership?
> Hence, any money used for share buybacks should logically be treated as net income for the company in question's next filing.
That money is rendered worthless from an economic perspective. In a healthy economy the profits of corporations are spent on more facilities, more suppliers, more employees, who all in turn spend their profits on the same.
We don't have a healthy economy. We have corporations that lose money every single day of their entire existence, but manage to drive their share prices by tax scams, accounting fraud, government subsidies, and share buybacks financed with debt the would not be available to them but for the existence of the scams, frauds, and government subsidies.
In that sense these corporations do not do anything of value, they are merely ephemeral structures to facilitate tax and investment risk avoidance for a certain class of people, at the expense of a tax base they do not participate in so should logically be shut out of.
When a corporation uses that money to buy back shares the money is effectively destroyed by being circulated among a financial class that has (mostly) bribed their way out of the tax system.
Hence, any money used for share buybacks should logically be treated as net income for the company in question's next filing.