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"For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation." https://www.forbes.com/
by 0xDEEPFAC 7y ago
"For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation."
https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-should-be-required-to-vote-on-stock-buybacks/#79b336e46b1e https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-...
- asdfasgasdgasdg 7y agoThank goodness that has stopped. They are not materially different from dividends, besides being more tax efficient.
- scarface74 7y agoThere is no logical reason that dividends should be taxed differently than capital gains (the result of stock buybacks) and really no reason either should be different than regular income.
- formercoder 7y agoIt's not just the question of capital gains. Dividends mandate a taxable event. Buybacks give you the option to continue holding and not pay taxes. That option has value.
- scarface74 7y agoYes but if you do sell you still pay a lower capital gains rate in the US.
- markvdb 7y agoStock buybacks versus capital gains makes all the difference for Belgian residents. No capital gains here. Foreign dividends get taxed at >= 40.5%, local dividends at 30%. Which is why accumulating funds are getting rather popular in Belgium...
- bduerst 7y agoBecause it creates a tax loophole? Im not sure if that's something to brag about.
- markvdb 7y agoI just highlighted one aspect of the Belgian tax system relevant to the discussion. Observing a tax avoidance loophole does not in any way correlate to bragging about it. Just to make things absolutely clear, I'll even happily make it explicit: I oppose it.
- davidivadavid 7y agoWhat about the fact they're unrealized?
- scarface74 7y agoI have no problem with only paying taxes when they are realized. I think I would be okay with not being taxed on dividends if they are reinvested within x number of days.
- deleted 7y ago[deleted]
- leetcrew 7y agoif capital gains were taxed like income (ie, at a higher rate), people would invest less money. is this good?
- Pfhreak 7y agoWould they? I'm not sure that's true. If they still beat out the rate on my savings account, I'd still invest. The super wealthy would just end up paying a bit more, but it's likely they'd remain super wealthy.
- skybrian 7y agoMaybe? If the alternative to investment is spending the money, this boosts the economy. Also, given the eagerness of investors to gamble on unicorns, it's unclear that there is any shortage of investment money. Occasionally there's talk of a global savings glut.
- scarface74 7y agoWhy wouldn’t spending money boost the economy? Besides when you “invest” in a publicly traded company, unless it’s at the IPO or another stock offering by the company, the company never sees the money and they aren’t getting any money from you.
- skybrian 7y agoYes, I agree that more spending boosts the economy. (Sorry about the unclear phrasing.)
- bduerst 7y agoThis was debunked with the cap gains tax breaks made in the early 2000s. Lowering the tax rate did not stimulate more investing activity, just cut government revenue.
- mars4rp 7y agoWhy paying less taxes is good and something everybody agree on?
- asdfasgasdgasdg 7y agoDo you donate money to your government above and beyond your taxes? I don't mean to impugn your political feelings. I consistently vote for people who will raise my taxes, personally. That doesn't mean I'm volunteering to pay more than I'm obligated within a system that doesn't provide the social services my family needs. I just want to point out that almost no one pays more taxes than they are legally obligated to, regardless of their political views. This implies that substantially everyone sees value in optimizing their taxes. In light of that, surely you can understand why the question you asked does not make much sense? The law is what it is, so of course within the law people will attempt to pay less taxes.