In a major policy announcement on Monday, the U.S. Treasury Department proposed a new framework that would significantly increase taxes on corporate stock buybacks, sending shockwaves through Wall Street. The proposed plan, part of a broader effort to promote 'fairer economic growth,' would raise the excise tax on share repurchases from 1% to 4%, quadrupling the existing levy enacted under the 2022 Inflation Reduction Act. Treasury Secretary Janet Yellen said in a press briefing that the move is intended to "discourage practices that prioritize short-term shareholder gains over long-term investment in workers, innovation, and infrastructure." Yellen emphasized that the funds generated from the increased tax would be directed toward social programs and deficit reduction. Markets responded swiftly to the news. The S&P 500 closed down 1.7%, with companies that have historically relied heavily on buybacks, such as major tech firms and banks, leading the decline. Analysts at Goldman Sachs noted that the proposed change could reduce corporate demand for equities by up to $200 billion annually if enacted. "This is a material headwind for stock prices," said David Kostin, Chief U.S. Equity Strategist at Goldman. "Buybacks have been a major source of demand for shares, and curbing that could exacerbate volatility, especially in a higher interest rate environment." The proposal still faces an uphill battle in Congress, where partisan divisions could delay or water down the final legislation. However, Democratic leaders, including Senate Majority Leader Chuck Schumer, have voiced strong support, suggesting that some version of the policy could pass later this year. Meanwhile, corporate executives have begun adjusting their strategies. Several major firms, including JPMorgan Chase and Meta Platforms, hinted during recent earnings calls that they might prioritize dividends and capital expenditures over buybacks going forward. The Treasury's announcement follows a broader trend of regulatory scrutiny on corporate practices traditionally seen as benefiting shareholders at the expense of broader economic interests. Investors are now bracing for increased policy-driven volatility as Washington continues to reshape the post-pandemic economic landscape.