Companies love to buy back their stock. A tax could deter them.

In President Joe Biden’s roughly $2 trillion Build Back Better Act, which narrowly passed the House on Friday but faces a tough fight in the Senate, Democrats have proposed a 1% tax on stock buybacks. Although it may not seem like much, the tax is a way to raise as much as $124 billion over 10 years, according to government estimates, and could help pay for the social spending and climate package. Both supporters and critics of the proposed surcharge say it could alter the behavior of companies but in ways that would have very different consequences for the economy.