Moreover, it is a myth that buybacks and dividends displace investments that companies would otherwise make to grow or develop innovations. While there was a substantial increase in buybacks and dividends last year, business investment also increased substantially and grew at the fastest rate since 2011. American companies invested nearly $3 trillion in the economy during 2018, including $460 billion in research and development. And the firms doing the largest buybacks are also the ones doing the most capital investment. Among large public companies, those that repurchased stock in the first three quarters of 2018 tended to engage in more capital expenditures and research and development investment than those electing not to do buybacks, according to our analysis of Securities and Exchange Commission filings of companies in the S & P 500.

Not only do buybacks and dividends support a stronger and more dynamic economy, they also contribute to Americans’ retirement security. According to the Federal Reserve, the majority of American households have direct or indirect ownership of corporate stock through pensions, retirement accounts or investment accounts. Similarly, stocks are owned by thousands of pension funds and mutual funds, and millions of Americans benefit from asset price increases or when shares in those funds receive a dividend.

Of course buybacks, like other methods of raising and allocating capital, can be abused, as is the case when companies may attempt to artificially inflate their stock prices in the short term by buying back shares. To avoid such abuses, public companies should have strong corporate governance practices guiding how the decisions about stock buybacks and dividends are made, to ensure they are made with the long-term interests in mind.

By contrast, imposing federal limitations on how companies decide to use their capital would stifle innovation and opportunity in America. Recent proposals to restrict buybacks and dividends, while presumably made with the laudable intent of increasing wages and capital investment, will only make it more difficult to achieve sustained and inclusive economic growth in the United States.

Joshua Bolten is president and chief executive of Business Roundtable. Ken Bertsch is executive director of the Council of Institutional Investors.

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