Sanders’ New Bill Rests on Economic Misunderstandings

Just three months after targeting Amazon with the Stop BEZOS Act, Sen. Bernie Sanders (I-VT) has turned his attention to another large employer. The “Stop Walmart Act” would penalize large corporations for buying back their stock unless all employees are paid $15 an hour and receive seven days of sick leave. It would also cap CEO compensation at 150 times of the pay of the median employee. Companies that buy back stock without meeting the legislation’s requirements would be subject to a fee equal to the amount spent on the buybacks. While businesses would still be able to buy back stock, then, they would pay a higher price for doing so. However, the Stop Walmart Act is based on a misunderstanding of business decisions and the factors behind wage growth. Criticizing stock buybacks for failing to help low-income workers has been common since the enactment of the Tax Cuts and Jobs Act, but it misunderstands the economic role of buybacks. As my colleague Erica…

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