ROOM for DEBATE: Pocketing Profits or Reinvesting Them


U.S. corporate profits abound, but for most Americans prosperity can’t be found. Open-market repurchases, aka stock buybacks, are central to the problem. For 2004-2013, 454 companies in the S&P 500 Index expended 51% of their profits, or $3.4 trillion, on repurchases, on top of 35% of profits on dividends. Of profits not distributed to shareholders, a big chunk was parked overseas, under a tax loophole that encourages U.S. companies not to invest at home. The real bottom line: corporate profits are high, but corporate reinvestment is low. Yet business investment in productive capabilities is the foundation of sustainable prosperity. 

Click here to read more on the debate and to follow the discussions on The New York Times.