Democratic presidential hopeful and New Jersey Sen. Cory Booker reintroduced a bill Thursday with the intent of ending corporate stock buybacks through a “worker dividend” meant to help the working class at a detriment to executives and shareholders.
The “Worker Dividend Act” was first introduced in March of 2018, and it requires companies to distribute the value of stock buybacks dollar-for-dollar. Essentially, that means if a company spends $500 million buying back its own stock, it must distribute another $500 million evenly across its workforce.
“This legislation has a simple premise: when companies do well, workers should do well,” the New Jersey senator and former governor said in a news release. “There’s no reason that a country as rich and as powerful as ours should have to choose between great wealth for the few, like corporate executives and shareholders, and great opportunity for all of its citizens, including its workers.”
The bill comes as other Democrats also seek to reign in growing wealth inequality in the United States. Stock buybacks have skyrocketed the past few years and particularly after President Donald Trump and a Republican-controlled Congress passed the Tax Cuts and Jobs Act in late 2017.
After the passage of the new tax bill, which slashed the corporate tax rate from 35% to 21%, U.S. companies spent a record $806 billion on stock buybacks in 2018, blowing past the previous record of $590 billion, set in 2007 — just before the financial crisis.
This year, U.S. companies are poised to spend more than $1 trillion buying back their own shares, a huge number that has helped keep the stock market going amid trade war volatility.
Buybacks have come under heavy scrutiny from Democratic lawmakers, who argue companies should use the tax windfall to invest in outside growth and their workers.
Sen. Elizabeth Warren, another 2020 Democratic hopeful, introduced a bill last summer that would force companies with more than $1 billion in revenue to allow workers to make up 40% of their board seats.
Sen. Bernie Sanders, I-Vt., another 2020 Democratic hopeful, and Senate Minority Leader Chuck Schumer, D-N.Y., also pushed for buyback restrictions last year.
The Democrats aren’t the only ones lashing out at corporate buybacks. Sen. Marco Rubio, R-Fla., also has lamented buybacks, saying in February “right now we don’t have a free market” while introducing a bill that would change the tax code to treat buybacks and dividends the same way.
“No tax advantage for buybacks over dividends. But we’re going to give permanent preference to investments that will drive the creation of jobs & increase in wages,” Rubio tweeted at the time.
However, bills aimed at addressing wealth inequality have not been able to pass the GOP-controlled Senate.
Booker reintroduced his bill with Sen. Bob Casey, D-Penn., and Rep. Joe Kennedy III, D-Mass.