That leaves the ultra-rich—and especially the billionaires—as the main beneficiaries of stock buybacks. The benefits are enormous, and become ever larger as we move up the wealth scale.

The situation of Google co-founders Larry Page and Sergey Brin exemplifies the wealth concentrating impact of the SEC rule change. Alphabet, which became the publicly-traded parent of Google in a 2015 reorganization, has bought back a lot of shares over the past 11 years. Page and Brin, the third and fourth wealthiest Americans, respectively, have a combined wealth totaling over half a trillion dollars. As of October 16th, the two held a combined total of 14,960,019,745 shares of Alphabet stock—778,102,320 for Page and 717,917,425 for Brin—which they’d held at least since Google’s IPO in 2004 (adjusted for stock splits over that period).

Brin is leading the opposition to California’s Proposition 40, which would impose a one-time wealth tax of five percent on all residents of California as of January 1, 2026 with personal wealth exceeding $1 billion. Brin claims to have changed his state of residence to Nevada prior to that date, although it’s not clear whether the steps he took to accomplish that change were sufficient to avoid California residence for purposes of Proposition 40. To date, Brin has contributed over $100 million to groups opposing Proposition or supporting Propositions 41 and 42, which effectively would nullify Proposition 40.

Page, similarly, has moved to Florida, although it’s not clear if he has avoided being a California resident as of January 1, 2026.

If Proposition 40 passed and if Brin’s attempt to avoid California residency were unsuccessful, his tax liability would be in the $12 billion to $14 billion range. His co-founder Page would face a slightly higher tax liability under Proposition 40. Their total liability would be around $28 billion, give or take a few billion.

I was curious how Page and Brin’s prospective Proposition 40 tax liability compares to the wealth they now hold that’s attributable to the 1982 SEC rule change. Would the one-time tax recoup the windfall bestowed on them by the SEC rule change?

To determine that windfall, we figured that without the rule change the profits used by Alphabet to buyback shares would instead have been distributed as dividends and that the dividends would have been taxable as ordinary income. Yes, the federal tax rate applicable to dividends was reduced in 2003 to equal the long-term capital gains rate, but analyzing the counterfactual of “if there were no SEC rule change” points to the assumption the tax rate applicable to dividends would not have been reduced. Because of the SEC rule change, there was not much point for anyone to oppose lowering the tax rate applicable to dividends in 2003. Corporations could protect their shareholders from the higher rate by buying back stock instead of issuing dividends.

Absent the SEC rule change, then, the revenue cost of a reduction in the tax rate applicable to dividends would have posed a much larger obstacle to enactment. Would the rate nonetheless have been reduced? We’ll never know. But since we’re exploring the potential windfall to Page and Brin attributable to the SEC rule change, the higher of the two possible tax rates on dividends was the logical choice.

To determine the savings to Brin and Page, we calculated the change in their percentage ownership of Alphabet that would have resulted from each stock buyback, beginning with the first stock buyback in 2015, had the amount used in the buyback instead been distributed as a dividend, followed by Page and Brin paying federal and state income tax on the dividend, then purchasing additional Alphabet shares with the after-tax proceeds of the dividend. For simplicity, we assumed a total 50 percent US and California rate for each year during the period. The actual annual rate during the period, factoring in the full federal deductibility of state income tax prior to 2018, would have been slightly higher.

Under this alternative scenario, Page and Brin would now hold 10.9 percent of the outstanding shares of Alphabet, some 1.3 percentage points less than the percentage they currently hold.

When you do the math, Page and Brin are $55 billion wealthier today than they would be had the limitation on stock buybacks that existed prior to 1982 not been modified and had dividends continued to be considered ordinary income for federal income tax purposes. [And if you assume the federal rate would have been reduced to the capital gains rate in 2003, they’re still $41 billion wealthier today by virtue of the 1982 SEC rule change.]

Put another way, about 10 percent of their obscene combined wealth of over half a trillion dollars has been derived from one tax giveaway. And—it’s important to note—that tax giveaway wasn’t even delivered by duly elected members of Congress. Rather, it was ordained by unelected regulators (or, really, anti-regulators) at the SEC.

If Proposition 40 passes and Page and Brin are required to pay the one-time tax, they’ll still be $25 billion ahead. Don’t feel too bad for them.

Page and Brin likely are the most extreme examples of how the 1982 SEC rule change conferred massive additional wealth on the wealthiest Americans. But they’re far from the only examples. Meta, Oracle, Nvidia and Dell all have distributed tens of billions of dollars in buybacks. Apple has bought back nearly half its shares through stock buybacks over the past decade. In total, stock buybacks have been running in the $1 trillion per year range and may hit $1.5 trillion this year. Today’s billionaires undoubtedly are sitting on several hundred billion dollars of additional wealth courtesy of stock buybacks.

The concentration of American wealth—and the accompanying concentration of political power—now poses an existential threat to our democracy. Stock buybacks have made this situation measurably worse than it otherwise would have been. We can’t do much about the damage that’s already been done. But we could avoid further damage.

This piece was first published on Substack.