Stock Repurchase Tax
Essentials of Corporate Finance
AUGUST 10, 2022
The Senate recently passed the Inflation Reduction Act of 2022. Major components of the Act include spending on climate change, increased IRS spending, and measures to lower the cost of prescription drugs. In order to pass the Act, a last minute change to get the necessary votes was a 1 percent excise tax on stock repurchases. As we showed in the text, dividends and stock repurchases affect a company and investors in much the same way.
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