Profits Without Prosperity (2014)
(2014)<p>This is the Harvard Business School Review. When HBR says something that increases CEO pay is a bad idea, it almost certainly is.<p>Stock buybacks are an incredibly inefficient way of increasing CEO pay. Especially if they involve taking on debt.<p>We need to tax corporate dividends, interest paid, and stock buybacks at the same rate.  There's a bias against dividends and in favor of debt in tax law, and that's why companies take on so much debt.  It's a subsidy program for the banking industry, which is why it's hard to change in the US. It doesn't particularly help non-financial corporations.<p>Also, "private equity" is mostly debt financing in disguise.  It's not people putting up their own cash. There's usually a little cash, and a lot of debt.<p>Something worth realizing: relative tax rates between business alternatives have a large effect on corporate behavior.  Absolute tax rates, not so much. As capital gains rates have gone up and down over the years, capital expenditures haven't followed.