Sen. Tammy Baldwin (D-Wis.) has introduced legislation that would restrict the right of companies to repurchase its shares on the open market, also known as stock buybacks.

Critics of stock buybacks claim that this repurchases come at the expense of investment in workers or the economy. In fact, by repurchasing shares, these companies are using excess capital to reinvest in themselves and create value for their shareholders.

Ending stock buybacks would harm economic growth. The economy is strong right now — between Q4 of 2017 and Q4 of 2018, GDP growth was 3.1 percent, dwarfing the anemic 1.8 percent average during the Obama administration. Nominal wages have grown by 3.4 percent over the last year, job openings sit at a record high of 7.6 million, and the unemployment rate is at 3.8 percent. Since Trump took office, the economy has added 5.1 million jobs, including nearly 400,000 in 2019 so far.

Restricting stock buybacks would also harm the 55 million workers that own a 401k and the 54 percent of Americans that own stocks. A recent floor speech by Sen. Pat Toomey (R-Pa.) highlights how stock buyback elimination would harm these workers:

“This idea would be very harmful to the people that it’s presumably meant to help. You know about 40% of all equities in the U.S. are held in pension and retirement accounts. These are the accounts of teachers and cab drivers and truck drivers and folks who work at factories and do every other job that our economy depends on who put a little money away. It’s in a 401k plan or it’s in an IRA or it’s in an employer-sponsored pension plan.”

Banning stock buybacks is a terrible idea that would have a cascade of negative effects to our economy. Sen. Baldwin and Senate Democrats should abandon this misguided legislation