Biden's third State of the Union address on stock buybacks

President Joe Biden is going to give his third State of the Union address Tuesday night at 9 p.m. According to the White House's official website, it's ET. According to a statement released by the White House Monday, the speech will focus on his plans to make it harder for corporations to buy back their own stocks.

Biden introduced a 1% stock buyback tax as part of his Inflation Reduction Act passed last year, but critics said the 1% was not high enough to discourage companies that wanted to purchase shares of their companies. Biden is expected to propose quadrupling the tax to 4%.

Stock buybacks are when a company uses some of its revenue to buy shares of its own company. The price is higher because of the lower supply of shares on the available market, according to former Secretary of Labor Robert Reich.

In the last year, American companies had more than $1.26 trillion worth of stock buybacks in 2022, an all-time high and up 3% from the previous year, according to Birinyi Partners.

According to the World Bank, the U.S.'s GDP is almost $23 trillion, so last year more than 1% of the world's GDP went into companies buying their own stocks.

Read Also: Biden To Press For Quadrupling Surcharge On Stock Buybacks And Renew Call For Billionaire Tax In State Of Union Address

Stock buybacks are great for shareholders. For others, not so much. Critics argue that companies spend more money on buybacks that would have gone toward a more efficient use, such as paying workers higher wages and research and development for new innovations.

According to a report by researchers at Harvard Law School, stock buybacks used to be illegal in the U.S. before President Ronald Reagan legalized them as part of his deregulation efforts.

It is common for CEOs and executives to have their compensation packages determined by the share price. There might be a little bias if people decide on whether or not to do a stock buyback happen to get more money if the company does carry through with the buyback.

According to the company's earnings call, the company's CVX announced $75 billion worth of stock buybacks for shareholders in the past couple of weeks. On the company's earnings call, Exxon Mobil Corp XOM followed with $30 billion in buybacks.

Meta Platforms Inc. META said it would be doing $40 billion in buybacks, which was announced on Meta's earnings call.