II 117th CONGRESS 1st Session S. 2758 IN THE SENATE OF THE UNITED STATES September 20, 2021 Mr. Brown (for himself and Mr. Wyden ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to impose an excise tax on stock buybacks of publicly traded corporations.

1. Short title This Act may be cited as the Stock Buyback Accountability Act of 2021 . 2. Excise tax on repurchase of corporate stock (a) In general Subtitle D of the Internal Revenue Code of 1986 is amended by inserting after chapter 36 the following new chapter: 37 Repurchase of corporate stock Sec. 4501. Repurchase of corporate stock. 4501. Repurchase of corporate stock (a) General rule There is hereby imposed on each covered corporation a tax equal to 2 percent of the value of any stock of the corporation repurchased by such corporation during the taxable year. (b) Covered corporation For purposes of this section, the term covered corporation means— (1) any domestic corporation the stock of which is traded on an established securities market (within the meaning of section 7704(b)(1)), and (2) any surrogate foreign corporation (as determined under section 7874(a)(2)(B)) the stock of which is traded on an established securities market (within the meaning of section 7704(b)(1)). (c) Repurchase For purposes of this section— (1) In general (A) In general The term repurchase means a redemption within the meaning of section 317(b) (applied as provided in subparagraph (B)) or any similar transaction (as determined by the Secretary) with regard to the stock of a covered corporation. (B) Application to economically equivalent transactions For purposes of applying section 317(b) to this section— (i) the acquisition by a corporation of the right to acquire its stock, and (ii) to the extent provided by the Secretary, any transaction economically similar to the acquisition by a corporation of its stock, shall be treated in the same manner as the acquisition by a corporation of its stock under such section 317(b). (2) Treatment of purchases by specified affiliates (A) In general The acquisition of stock of a covered corporation by a specified affiliate of such covered corporation from a person who is not the covered corporation or a specified affiliate of such covered corporation shall be treated as a repurchase of the stock of the covered corporation by such covered corporation. (B) Special rules for foreign-parented domestic corporations (i) In general In the case of an acquisition of stock of an applicable foreign corporation by a specified affiliate of such corporation from a person who is not the applicable foreign corporation or a specified affiliate of such applicable foreign corporation, for purposes of this section— (I) such specified affiliate shall be treated in the same manner as a covered corporation with respect to such acquisition, and (II) such acquisition shall be treated as a repurchase of the stock of such specified affiliate by such specified affiliate. (ii) Applicable foreign corporation For purposes of this subparagraph, the term applicable foreign corporation means any foreign corporation which would be treated as a covered corporation under this section if it were a domestic corporation. (C) Specified affiliate For purposes of this section, the term specified affiliate means, with respect to any corporation— (i) any domestic corporation more than 50 percent of the stock of which is owned (by vote or by value), directly or indirectly, by such corporation, and (ii) any domestic partnership more than 50 percent of the capital interests or profits interests of which is held, directly or indirectly, by such corporation. (3) Adjustment The amount of any stock repurchased by a covered corporation taken into account under subsection (a) shall be reduced by— (A) the value of any stock newly issued by the covered corporation during the taxable year, and (B) the value of any stock issued to employees of such covered corporation during the taxable year, including in response to the exercise of an option to purchase stock of the covered corporation. (d) Exceptions Subsection (a) shall not apply— (1) to the extent that the repurchase is part of a reorganization (within the meaning of section 368(a)) and no gain or loss is recognized under chapter 1 on such repurchase by reason of such reorganization, (2) in any case in which the stock repurchased is, or an amount of stock equal to the value of the stock repurchased is, contributed to an employer-sponsored retirement plan, employee stock ownership plan, or similar plan, (3) in any case in which the total value of the stock repurchased during the calendar year does not exceed $1,000,000, (4) under regulations prescribed by the Secretary, in cases in which the repurchase is by a dealer in securities in the ordinary course of business, or (5) to the extent that the repurchase is treated as a dividend for purposes of this title. (e) Denial of deduction No deduction shall be allowed under any provision of this title with regard to the tax imposed by this section. (f) Regulations and guidance The Secretary shall prescribe such regulations and other guidance as are necessary or appropriate to administer and to prevent the avoidance of the purposes of this section, including regulations and other guidance— (1) to prevent the abuse of the exceptions provided by subsection (d), (2) with respect to the identification of transactions to which subsection (c)(1)(B)(ii) applies, (3) to address special classes of stock and preferred stock, and (4) for the application of the rules under subsection (c)(2). . (b) Clerical amendment The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 36 the following new item: Chapter 37—Repurchase of corporate stock . (c) Effective date The amendments made by this section shall apply to repurchases (within the meaning of section 4501(c) of the Internal Revenue Code of 1986, as added by this section) of stock after December 31, 2021.