Quadrupling the tax on share buybacks, as the White House recently proposed, is an idea that never should have made it off the drawing board.

Publicly traded companies, including those listed on the New York Stock Exchange, use share buybacks as a tax-efficient tool to return excess capital to their shareholders. Who are these shareholders? Ultimately, the vast majority are millions of ordinary Americans saving for retirement, college education and their financial freedom.

The Biden administration thinks increasing the tax rate on this important tool, from 1% to 4%, will force companies to allocate their capital in a different way.

Could this work? Rather than rely on opinion, we surveyed the leaders of some of our largest NYSE-listed companies about the moves they’d make if the envisioned tax hike becomes law. The answers to our informal poll were informative.

Analyzing the results suggests that not only would the proposed buyback tax increase fail to achieve its goals, but it would harm ordinary investors. It would also threaten the public company ecosystem that is so critical to the U.S. economy.

Capital allocation is a core responsibility of management teams and their boards of directors. Returning capital to the real owners of a company — its shareholders — has real value. A company repurchasing its stock avoids the pressure to invest sub-optimally. Instead, the company is giving its investors the choice of where those funds are allocated. It’s their money, after all.

The fact that listed-company leaders answered that they would not alter their approach to capital expenditures, hiring and R&D — the central premise of the tax increase — if buyback taxes are increased makes perfect sense. This is because the decision to return capital to shareholders typically takes place after decisions about reinvesting in the business. It is the unused money left over, once those decisions are made, that is commonly used for buybacks.

The shift our NYSE leaders foreshadow — from buybacks to dividends and special dividends — points to a serious problem with the proposed tax increase. Dividends can trigger taxable events for investors. So, rather than changing companies’ approach to capital allocation, taxing buybacks would simply take money out of the pockets of ordinary investors at a time when they are already contending with rising interest rates, inflation and geopolitical uncertainty.

Finally, it’s important to note that in addition to stockholders, the buyback tax also stands to harm our ecosystem of public companies — and all the jobs those companies create. In a market awash in private capital, this artificial barrier to returning capital to shareholders represents yet another disincentive for companies to go public, or remain public. We need more public companies to invest in, not fewer.

The truth is this: A higher tax on stock buybacks stands to hurt all of us, public companies, shareholders and employees alike.