President Biden pushes back on stock buybacks during State of the Union
Yahoo Finance’s Rick Newman joins the Live show to recap President Biden’s State of the Union address.
Video Transcript
JULIE HYMAN: I will too. And the third thing you need to know, President Biden took the House chamber last night for his annual State of the Union address where he took stock of the country's progress over the last two years and ran through a slew of economic proposals. A key takeaway from the night for investors was Biden's focus on taxes and corporate stock buybacks as part of his push to be less favorable to the wealthy.
JOE BIDEN: Corporations ought to do the right thing. That's why I propose we quadruple the tax on corporate stock buybacks and encourage long-term investments.
[APPLAUSE]
They'll still make considerable profit. Let's finish the job and close the loopholes that allow very wealthy to avoid paying their taxes. Instead of cutting the number of audits for wealthy taxpayers, I just signed a law to reduce the deficit by $114 billion by cracking down on wealthy tax cheats.
JULIE HYMAN: Let's hone in on this and other takeaways for investors from the speech with Yahoo Finance's Rick Newman. Rick, I could talk all day about the theater of Kevin McCarthy shaking his head sternly behind the president while Kamala Harris rose to her feet and started clapping, but I won't. How likely are-- if you look at the various economically related things that he talked about, Biden in the speech, how likely are any of them to make it anywhere?
RICK NEWMAN: There was more theater than that of course, Julie, with the catcalls from some of the Republicans in the audience. It was fairly interesting theater last night.
But let's go back to these specific points. So Biden-- a couple of the things he did call for, you heard there he wants to quadruple the tax on stock buybacks. That tax went into effect for the first time last year as part of one of the bills Biden signed. Now he wants more revenue from that.
He also called for an oldie but a goodie, which is a billionaires tax. And none of these things are going to happen. So I think investors knew this going in. Biden is not going to get any democratically passed legislation for the next two years because Republicans control the House. So why is he bringing this all up? The speculation is that this is the beginning of Biden's campaign for a second term. So Biden may be campaigning for a second term in 2024 and using these same talking points.
But, you know, everybody should keep a few things in mind. Democrats did control Congress, both houses, during the first two years of Biden's presidency, and they could not pass an increase in the corporate income tax. That's something Biden wanted to do. They could not even repeal the so-called carried interest loophole, which is a tax break that mainly benefits private-equity firms. They couldn't get that done. And there were almost no really significant tax increases at all during those first two years.
So Democrats couldn't get this done when they had control of Congress. It's not going to happen during the next two years, and it's dubious whether it would happen if Biden won another term in 2024.
BRAD SMITH: Yahoo Finance's own Rick Newman. Thanks so much for watching the State of the Union, breaking all of this down. We appreciate it, Rick. Thanks.
RICK NEWMAN: Bye, guys.
