Critics of corporate stock buybacks prompted by the GOP tax law are ignorant about the way capital markets work, JPMorgan Chase CEO Jamie Dimon said Tuesday.
Congressional Democrats have bashed the Trump-signed tax overhaul on the grounds that it has led to an increase in companies buying back shares and paying out dividends, moves that disproportionately return money to high-income people.
Dimon took issue with that line of criticism, though, on a call with reporters Tuesday morning in his role as chairman of the Business Roundtable.
“I think it’s a tremendous error for people to think there’s something wrong with stock buybacks and dividends,” he said. “That is a natural function of capital markets and the proper deployment of capital.”
Companies return money to investors, he explained, when they don’t have a good use for it. Then, investors are able to put the money to a “higher and better use.”
“For the life of me, I don’t understand how anyone can say that’s a bad thing,” he remarked. “That is coming from people who are basically ignorant of how capital markets function.”
Democrats have attacked the tax law by arguing that it has benefited corporations and investors rather than workers.
On Tuesday, Senate Minority Leader Chuck Schumer of New York renewed that criticism on the Senate floor.
Corporations have announced $450 billion in buybacks this year, he claimed. He described buying back shares as “a maneuver that directs profits into the pockets of wealthy executives and shareholders but does little for workers.”
