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Just read up about stock buybacks for a bit and tell me the whole thing isn’t a rigged scam.
by cammikebrown 4y ago
Just read up about stock buybacks for a bit and tell me the whole thing isn’t a rigged scam.
- recycledmatt 4y agoThis is driven by tax policy more than anything. It’s cheaper to make the pool of available stock smaller vs distribute as a dividend. The CEO’s fiduciary duty is to shareholder value. The rest is a game.
- danielmarkbruce 4y agoHanding money back to stockholders isn't a scam. Every stock buyback either a) gives me money if I sell and I get to keep the same % of the company I owned before, or b) makes me own more of the same company. And the tax treatment is better than a dividend.
- latchkey 4y ago> And the tax treatment is better than a dividend. How do you think that rule got passed?
- danielmarkbruce 4y agoWhich rule exactly? There are a number of rules interacting which make buybacks in the US better right now, it's not just a rule that says "buybacks will have better tax treatment than dividends". The dividend tax rate could be changed to zero tomorrow (or the tax treatment on dividends could become like other countries who don't double tax) and buybacks would be less favorable. Taxes are complicated, there will always be one choice which is better than another from a tax perspective.