Shareholders are 100% paying this tax. Shareholders own the company; If the company pays X% tax, it really means the 'shareholders' are paying it. (Edit: For

Shareholders are 100% paying this tax. Shareholders own the company; If the company pays X% tax, it really means the 'shareholders' are paying it. (Edit: For example the company has $200 in assets. They pay out $100 in a buyback, the remaining shareholders would have to pay the $2 out of their assets. This would technically play out in the valuation of the shares at the time of buyback.) Moreover, it will affect companies decision making for no obvious benefit to anyone. This is a total curve ball, I can't even fathom why the government is doing this, there is no obvious upside. It's a really odd things that 'share buybacks' are considered some kind of negative thing. They are a re-balancing financial activity for the most part. Money goes in, money comes out and goes elsewhere etc. - this is good. Edit: it's a bit like having a tax for taking cash out of a bank account. If the company needs the money for productive things, they probably would not be doing a buyback. The notion the gov. would want to inhibit money from moving from one spot where it's probably not being used efficiently, makes no sense. If the government needs to raise revenues, it would be far more rational to simply hike corporate taxes by some amount.