BlackRock to ask how companies will spend cash in U.S.
Fink said the tax cuts may do little to boost economic growth as investors pile the cash into buying their shares back or paying a dividend, boosting their stock prices, but not hiring new employees or growing their businesses, Reuters reported.
BlackRock oversees $5.1 trillion in assets, ranking as a top shareholder of many of the world's largest companies. It votes on the composition of those companies' boards as well as on governance proposals from management and shareholders.
"If tax reform also includes some form of reduced taxation for repatriation of cash trapped overseas, BlackRock will be looking to companies' strategic frameworks for an explanation of whether they will bring cash back to the U.S. and if so, how they plan to use it," Fink wrote in an annual letter to the CEOs of the S&P 500.
"Will it be used simply for more share buybacks? Or is it a part of a capital plan that appropriately balances returning capital to shareholders with prudently investing for future growth?"
Fink also said U.S. lawmakers should raise the threshold at which capital gains on investments are taxed at a reduced rate, from one year to three years, to reward long-term investment. ■