Stock Buybacks and Dividends Help Expand Economic Freedom

According to Federal Reserve data, households headed by individuals over the age of 55 own 73% of the value of U.S. domestic stocks.

WASHINGTON – The American Securities Association (ASA) today sent a letter to leadership of the House Financial Services Committee expressing significant concerns with legislation targeting stock buybacks and dividends that impose a “savings tax” on America’s retirement savers and Main Street investors.

“These bills impose a new ‘savings tax’ on workers, retirees, senior citizens, and every Main Street investor hoping to share in the success of America’s public companies,” ASA CEO Chris Iacovella wrote in the letter.

Iacovella also warned that any “central planning mandate that forces businesses to allocate their capital away from the owners of companies (i.e. retail investors, savers, and retirees) and toward non-owners (i.e. politically motivated special interest groups), would be an unprecedented confiscation of shareholder rights by the U.S. government. This would deprive mom and pop investors of their economic freedom, elevate the status of special interest groups over retail investors, introduce corruption into the corporate governance model, and do absolutely nothing for hardworking American families who are trying their best to build and sustain wealth.”

According to Federal Reserve data, households headed by individuals over the age of 55 own 73% of the value of U.S. domestic stocks. It is these households – in or near retirement – that will suffer the most if Congress severely limits or prohibits the ability of businesses to return money to shareholders through buybacks or dividends.

These bills also create a dilemma for small businesses seeking public capital and companies of all sizes that currently trade in the public markets. “Why would anyone take their company public or stay public if the government can take over their board of directors or force management to bend to the will of special interest groups in order to invest in areas that make little economic sense?” Iacovella wrote.

“Businesses of all sizes must retain the ability to allocate capital through dividends, share buybacks, investment in R&D, hiring, wage increases, capital projects, or any other way that management believes will enhance the long-term performance of a company and benefit investors who own the company.”

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ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at http://americansecurities.org/.