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Of course I understand that. But why it should be allowed to pay accumulated profits out from the company in a way that the taxes for share owners are deferred?
by beefield 7y ago
Of course I understand that. But why it should be allowed to pay accumulated profits out from the company in a way that the taxes for share owners are deferred? What is the societal good of that?
- sokoloff 7y agoWe generally tax income/profit. Taxes for all shareholders are deferred until they sell. Taxes for all retail businesses are deferred until they sell their product. Taxes for all homeowners are deferred until they sell their house. Taxes for all art/collectible investors are deferred until they sell. It’s a matter of practicality and fairness. (Don’t make someone sell an investment solely to raise the cash to pay taxes on an unrealized gain. Don’t create paperwork that’s unnecessary. The government is a patient investing partner. They’re willing to wait to take their cut when you sell. They can borrow arms-length money in the meantime far more cheaply than you can anyway.)
- beefield 7y ago> Taxes for all shareholders are deferred until they sell Sorry, but this is plain out wrong. If you are shareholder and get dividends, you pay taxes. Even before you sell.
- sokoloff 7y agoThe issue of dividend taxation is tangent to the issue of capital gains taxation timing. My apologies if my text was somehow confusing to suggest that I believed shareholders didn’t pay taxes on dividends when received as income.