This news will stun readers, I know, but US company executives have found a way to siphon off Trump’s company tax cuts for themselves.
As is now widely accepted, the tax cuts have mostly flowed into share buybacks and higher dividends by US companies — with buybacks hitting an all-time record level. Buybacks usually push the price of shares up. A new investigation by the Securities and Exchange Commission has spotted that buybacks are being immediately followed by company executives offloading some of their own stock to take advantage of rising prices. As CNN put it, “the report studied 385 buybacks in 2017 and during the first three months of 2018. Thanks to the reliable stock bounce, insiders gained a total of $75.1 million on their stock sales, the SEC researchers calculated”.
Such trading isn’t necessarily illegal, SEC commission Robert J. Jackson said. However he said that “the Trump tax bill has unleashed an unprecedented wave of buybacks, and I worry that lax SEC rules and corporate oversight are giving executives yet another chance to cash out at investor expense”.
What chance Australia’s well-remunerated corporate executives won’t do exactly the same if the Business Council and the government have their way and handed tens of billions of dollars in windfalls to companies — many of whom are already handing back capital via share buybacks or higher dividends?
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