I think this can make sense theoretically and what about cases where companies just horde wealth like Apple or spend it on stock buybacks (like Apple)? I'd want to see some sort of impetus for them to either reinvest or pass it along to their employees.
> I think this can make sense theoretically and what about cases where companies just horde wealth like Apple or spend it on stock buybacks (like Apple)?
Eventually that money is going to come back though - no shareholder wants a company to sit on a massive cash pile for decades.
If a company can’t find a use for the money, then investors will want that cash returned so that they can find a use for it elsewhere.
Apple itself set a goal in 2018 to be net cash neutral:
And when the money comes back to investors, that’s when taxes can be paid and everyone benefits.
Stock buybacks also result in capital gains taxes eventually - it just takes a long time because investors get to choose when to take the gain. If we wanted to fix that, we could just make stock buybacks illegal again like they were before 1982.
Then investors would get dividends again, which results in immediate revenue for the federal government.
It seems strange to me that someone would want to punish a corporation for maintaining a larger reserve with which to handle economic downturns and the like, allowing them to continue to pay and employ those same employees instead of just letting them go.
"Hording cash" sounds like NOT spending on expenses and offsetting profits, and therefore likely involves that corporation being taxed. In addition it sounds a lot more sustainable than wall streets typical obsession with short term gains Uber alles.
Using that money to retain staff during a downturn instead of doing layoffs sounds great and would make sense as something to incentivize through the tax code. There's definitely a point where a company can have an unreasonable amount of cash on hand.
