You are correct. It might be preferable to amend the tax code to only tax the increase in value of shares purchased under a dividend reinvestment plan rather th

You are correct. It might be preferable to amend the tax code to only tax the increase in value of shares purchased under a dividend reinvestment plan rather than the reinvested dividends themselves, as a way to discourage the buyback workaround. After all, I would be more comfortable with more shares at a lower valuation than fewer shares at a higher valuation, since Mr Market is an inconsistent figure and I would stand to gain more (from reinvested dividends) if the stock rises than lose (with buyback-inflated shares) if it falls.