The S & P 500 index recorded a sharp decrease after Rubio, a Florida Republican, tweeted a series of nine messages regarding his buyout proposal.
"The rationale for corporate buyouts is that the company has no better investment available.This may be true for any business from time to time." But what does he say? when is this the case for many companies year after year? " Rubio asked in the first of nine tweets.
"We will soon be introducing a bill to make immediate spending immediate and business buybacks the same as dividends, no tax breaks for dividend buy-backs, but we're going to focus permanently on investments that are likely to create jobs and raise wages ", The ninth tweet of Rubio has been read.
"At present, does not have a" free market ". We have a tax code that allows the economy to inflate stock prices at the expense of future productivity and job creation. If we are going to use a tax code to incentivize should invest in productivity and employment ", The eighth tweet of Rubio said.
This prevented an optimistically motivated rally that President Donald Trump would be closer to accepting a border deal that would avoid a further government shutdown.
Rubio's attack on the GOP's 2017 tax law stating that this encourages companies to hurry to buy back shares, hurting the economy.
The Florida Republican, as chair of the Senate Committee on Small Business and Entrepreneurship, released Tuesday a plan to reduce incentives for companies to use excess capital to buy back shares, a decision appreciated by investors because it can increase the stock price.
Redemptions should be taxed in the same way as dividends, and companies should be able to immediately offset the costs of increasing capital and research and development costs, in accordance with the plan.
"The money spent on stock repurchases is not the money spent on capital investment," according to the plan, which echoes Rubio's comments formulated in December. "The establishment of a more productive industrial base will require more investment in tangible assets."
Rubio, who voted for the tax law, echoes the message the Democrats used to criticize the legislative advance of his party's signing under President Donald Trump. They said that the 2017 law, which reduces the corporate rate to 35%, from 35% to 21%, is a gift for businesses, many of whom use their savings to buy back shares. The tax legislation also provides for tax breaks to invest in equipment and real estate, but these expire in 2022, while corporate rate cuts are permanent.
The main proponents of the Trump tax system have sought to minimize the benefits to businesses. The chairman of the White House Council of Economic Advisers, Kevin Hassett, said in an editorial in April that those who described the tax cuts as helping businesses at the expense of the working class were "wrong". Treasury Secretary Steven Mnuchin said the buybacks help to recycle capital through the economy, which is ultimately good for all Americans.
Global share buybacks, also known as share buybacks, increased by almost 50%, reaching $ 384 billion in the first half of 2018, six months after the adoption of the tax law, according to a study by Goldman Sachs. Professional equipment orders, an indirect indicator of capital spending, missed estimates in recent months.
Rubio, who had run for president as president in 2016, had already criticized his party for overseeing the 2017 tax cuts towards businesses and not enough towards families. During the last days of debate in the Senate, Rubio and Mike Lee (Utah) urged the government to raise the corporate tax rate to fund a more generous tax cut for children. After legislators agreed to increase the refundable portion of the loan, Rubio backed the law.
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